The accountant for Snappy photographic Supply Ltd has estimated the following activity cost pools and activity drivers for the coming year:
An order for 1000 boxes of film development chemicals has the following production requirement:
Machine setups ……………………………. 4 setups
Raw material ……………………… 10 000 kilorams
Hazardous materials …………….. 2 000 kilogerams
Inspections …………………………. 10 inspections
Machine hours ………………… 500 machine hours
Required:
1. Calculate the total overhead that should be assigned to the order for development chemicals.
2. What is the overhead cost per box of chemicals?
3. If Snappy Photographic Supply Ltd were to use a plant-wide predetermined overhead rate base machine hours, calculate the rate per hour.
4. Under the approach in requirement 3, how much overhead would be assigned to the order for development chemicals:
(a) In total?
(b) Per box of chemicals?
5. Explain why these two product costing systems result in such widely differing costs. Which system do you recommend? Why?
6. Calculate the unit cost of a production order for 100 specially coated plates used in film development. In addition to direct material costing $180 per plate and direct labour costing $60 per plate, the order requires the following:
Machine setups ………………………………………. 2 setups
Raw material …………………………………… 800 kilograms
Hazardous materials …………………………….. 300 kilograms
Inspections ………………………………………… 3 inspections
Machine hours………………………………… 50 machine hours
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com