(WIP) ACC 350 Exam 1 Study Material
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Requirements:<br />
a. Determine the plant-wide overhead rate using the current costing system.<br />
$3,570,000 of MOH costs<br />
50,000 units of push model @ 1 DLH/unit = 50,000 DLH<br />
10,000 units of self-propelled model @ 2 DLH/unit = 20,000 DLH<br />
Total DLH = 70,000<br />
MOH Rate = $3,570,000 / 70,000 DLH = $51.00 per DLH<br />
b. Determine the gross margin (per unit) of the two models using the current costing system.<br />
Push:<br />
DM = $38<br />
DL = $30/DLH * 1 DLH = $30<br />
MOH = $51.00 * 1 DLH = $51<br />
Total Product Cost = $119.00<br />
Selling Price = $145<br />
Gross Margin = $145 – $119 = $26 per unit<br />
Self-Propelled:<br />
DM = $54<br />
DL = $30/DLH * 2 DLH = $60<br />
MOH = $51 * 2 DLH = $102.00<br />
Total Product Cost = $216.00<br />
Selling Price = $275<br />
Gross Margin = $275 – $216 = $59 per unit<br />
c. For each activity, calculate activity rates<br />
Activity Annual Cost Activity Driver Total Activity Rate<br />
Engineering Design $440,000 Engineering hrs 1,000 $440.00<br />
Inspections $780,000 Inspection Hrs 200 $3,900.00<br />
Production Set-ups $610,000 Setup time 200 $6,100.00<br />
Scheduling $220,000 # of batches 200 $1,100.00<br />
<strong>Material</strong> Handling $295,000 # of batches 200 $1,475.00<br />
Machine Maintenance $450,000 MH 90,000 $5.00<br />
Facility Costs $775,000 DLH 70,000 $11.07<br />
d. Determine the gross margin (per unit) of the two models using the ABC information.<br />
NOTE: Your answers may differ slightly based on your rounding.<br />
Activity Push Self-Propelled<br />
Engineering Design $154,000 $286,000<br />
Inspections 195,000 585,000<br />
Production Set-ups 305,000 305,000<br />
Scheduling 110,000 110,000<br />
<strong>Material</strong> Handling 147,500 147,500<br />
Machine Maintenance 250,000 200,000<br />
Facility Costs 553,571 221,429