Accounting for decision making and control: Chapter
Not what you're looking for?
P 11-3: GAMMA
GAMMA produces over a hundred different types of residential water faucets as its
Delta, Florida plant .This plant uses activity -based costing to calculate product costs.
The following table summarizes the plant's overhead for the year and the cost drivers
Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions
Activity center of dollars) Cost driver Amount of cost Activity cost per unit
&nbs p; &n bsp; Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 &n bsp;Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 &nb sp;Direct labor $ 90 million $0.18
----------------
Total plant overhead $ 68.5
----------------
One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor ; &nb sp; $ 121,700
Direct materials & nbsp; ; 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 &nb sp; 155,250
Setup ; 8 13,600 &n bsp; 108,800
Engineering ; 1 87,200 &nb sp; 87, 200
Occupancy $121,70 0 $0.18 &nbs p; 21,906
&nbs p; &n bsp; ---------------------
Total cost &nbs p; $599,836
Number of units manufactured &nbs p; 12,500
&nbs p; &n bsp; ---------------------
Product cost per unit &nbs p; $ 47.99
&nbs p; &n bsp; ----------------------
Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant
Overhead is assigned to products using direct labor dollars.
Purchase this Solution
Solution Summary
Accounting for decision making and controls are examined.
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Introduction to Finance
This quiz test introductory finance topics.
Operations Management
This quiz tests a student's knowledge about Operations Management
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.