Auto Detail Company manufactures two basic types of production: vinyl and metallic adhesive-backed striping used by automobile manufacturers. The company traditionally has allocated manufacturing overhead to its product line using direct labor hours as a cost driver. More recently, the company has explored the use of two additional cost drivers as it evolves into an activity-based costing system. The following data summarize overhead application drivers and rates for the traditional and activity-based cost system.
Traditional: $175 per direct labor hour
$120 per direct labor hour
$345 per machine changeover
$100 per inspection
Per Production Run
Vinyl Striping Metallic Striping
Direct Labor Hours 10 hours 8 hours
Batch Size 180 rolls 65 rolls
Number of Inspections 0 3
A. Calculate the overhead cost per roll to manufacture the vinyl striping and the metallic striping using the traditional method.
B. Calculate the overhead cost per roll to manufacture the vinyl striping and the metallic striping using the activity-based cost method.
C. Explain the cause or causes of the differences in cost for each product when using traditional and ABC methods.© BrainMass Inc. brainmass.com October 25, 2018, 1:20 am ad1c9bdddf
The solution examines per production run for an auto detail company. The overhead cost per roll to manufacture the vinyl striping and the metallic stripping using the activity-based cost method.
Financial Accounting Analysis
** Please see the attached file for the requisite financial statements **
SAC has developed revolutionary manufacturing techniques utilizing its new spark plug manufacturing technology to offer special-order spark plugs for the auto racing industry. The company is currently using process costing for its spark plugs but is considering using job order costing for the new specialty spark plugs. How does job order costing differ from process costing? Should SAC use process or job order costing for the specialty spark plugs? Make a recommendation for SAC. Be sure to fully back up your recommendation.
The Sparklin Automotive Company (SAC) has been in business since 1930. It began business in the United States supplying spark plugs to automotive manufacturers (OEM, the original equipment market) and the automotive aftermarket.
SAC has introduced a new spark plug manufacturing process in the United States that produces a higher quality spark plug guaranteed to last 100,000 miles. The introduction of this spark plug has been very successful in the United States.
In addition to these types of projects, your responsibilities include creating and analyzing the monthly performance of each plant and consolidating the results into a set of financial statements footnoted with explanations.View Full Posting Details