Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. ProcessActivityBudgeted CostActivity Cost DriverBudgeted Activity UsageAssemblyMachining$ 310,200Machine hours (MH)7,200 Setups26,000Setups60 $ 336,200 FinishingInspecting$ 222,000Inspections740SupportPurchasing$ 136,000Purchase orders540 Additional production information concerning its two models follows. Units and ActivitiesModel XModel ZUnits produced1,8003,600Machine hours2,2005,000Setups2040Inspections500240Purchase orders360180 Per UnitModel XModel ZSelling price per unit$ 410$ 390Direct materials cost per unit155115Direct labor cost per unit1301451. Compute the activity rate for each activity using activity-based costing.2. Using activity-based costing, compute the overhead cost per unit for each model.3. Compute the total product cost per unit for each model.4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit). Determine product cost per unit for each of the two products using activity-based costing. (Round intermediate calculationsand final answers to 2 decimal places.)Per UnitRounded EdgeSquared EdgeDirect MaterialsDirect Labor< Required 2OverheadProduct Cost per UnitRequired 3 >

Activity-based costing is a costing approach in which a company's activities are identified and the…

Answered: Ice Cool produces two different models…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 4MC: Overhead costs are assigned to each product based on __________________. A. the proportion of that...

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Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.

Process	Activity	Budgeted Cost	Activity Cost Driver	Budgeted Activity Usage
Assembly	Machining	$ 310,200	Machine hours (MH)	7,200
	Setups	26,000	Setups	60
		$ 336,200
Finishing	Inspecting	$ 222,000	Inspections	740
Support	Purchasing	$ 136,000	Purchase orders	540

Additional production information concerning its two models follows.

Units and Activities	Model X	Model Z
Units produced	1,800	3,600
Machine hours	2,200	5,000
Setups	20	40
Inspections	500	240
Purchase orders	360	180

Per Unit	Model X	Model Z
Selling price per unit	$ 410	$ 390
Direct materials cost per unit	155	115
Direct labor cost per unit	130	145

1. Compute the activity rate for each activity using activity-based costing.
2. Using activity-based costing, compute the overhead cost per unit for each model.
3. Compute the total product cost per unit for each model.
4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).

Determine product cost per unit for each of the two products using activity-based costing. (Round intermediate calculations
and final answers to 2 decimal places.)
Per Unit
Rounded Edge
Squared Edge
Direct Materials
Direct Labor
< Required 2
Overhead
Product Cost per Unit
Required 3 >

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