a company manufactures household items sold at trade shows. the items, classified as either tables or…

a company manufactures household items sold at trade shows. the items, classified as either tables or frames, are manufactured on a common assembly line. although different direct materials are used, the direct labour cost is the same for each product.\nthe plant - wide rate for allocating manufacturing overhead to its products is no longer acceptable. the production manager has heard about activity - based costing and has assembled some information for use in changing the cost system to a cost driver concept.\nwith the help of the accounting department, the manager has been able to establish the following relationships between production costs and some of the indirect manufacturing activities for july, along with the production data for the two product lines:\n\n\n\ndirect costs:\n\n\n\nsubmission instructions:\nusing activity - based costing determine the total production cost of each of the two product lines for july and the cost per unit, assuming all units started were completed.

a company manufactures household items sold at trade shows. the items, classified as either tables or frames, are manufactured on a common assembly line. although different direct materials are used, the direct labour cost is the same for each product.\nthe plant - wide rate for allocating manufacturing overhead to its products is no longer acceptable. the production manager has heard about activity - based costing and has assembled some information for use in changing the cost system to a cost driver concept.\nwith the help of the accounting department, the manager has been able to establish the following relationships between production costs and some of the indirect manufacturing activities for july, along with the production data for the two product lines:\n\n\n\ndirect costs:\n\n\n\nsubmission instructions:\nusing activity - based costing determine the total production cost of each of the two product lines for july and the cost per unit, assuming all units started were completed.

Answer

Explanation:

Step1: Calculate Material handling cost

For Tables: (2000\times1 = 2000) For Frames: (1300\times1=1300)

Step2: Calculate Machining cost

For Tables: (205\times15 = 3075) For Frames: (300\times15 = 4500)

Step3: Calculate Assembly cost

For Tables: (1000\times1.60=1600) For Frames: (1300\times1.60 = 2080)

Step4: Calculate Inspection cost

For Tables: (100\times2=200) For Frames: (1200\times2 = 2400)

Step5: Calculate total production cost for Tables

Direct labour (+) Direct materials (+) Material handling (+) Machining (+) Assembly (+) Inspection (12000+5200 + 2000+3075+1600+200) (=24075)

Step6: Calculate total production cost for Frames

Direct labour (+) Direct materials (+) Material handling (+) Machining (+) Assembly (+) Inspection (12000+2600+1300 + 4500+2080+2400) (=24880)

Step7: Calculate cost per unit

For Tables: (\frac{24075}{1000}=24.075) For Frames: (\frac{24880}{1300}\approx19.14)

Answer:

  • Total production cost for Tables: ($24075), Cost per unit: ($24.075)
  • Total production cost for Frames: ($24880), Cost per unit: ($19.14)