Hello I am having a lot of trouble with two problems I spent a lot of time on them but can not figure them out...I need help asap . Thanks
Dynamic Products, Inc. manufactures a wide variety of products in it's planet in Macon, Georgia. Management has identified the following manufacturing and adminstrative activites.
1. Special equipment is used to add a protective finish to a various products.
2. Purchase order as issued to acquire raw materials.
3.Factory managers run training programs in quality control for new employees.
4.Machine setups are necessary for each batch of goods produced.
5. Janitors clean the offices and the planet floor each evening.
6. Warehouse personnel pull the stock needed for production and move the materials to the plant floor.7. Receiving clerks inspect incoming materials and prepare receiving reports.
8. Quality control inspectors test each bath of goods before it is stored or shipped.
9.Payroll clerks process the factory workers time cards and prepare weekly paychecks for distribution.
10. Engineers develop new-product specifications and redesign existing products as needed.
A. Classify each of the activities listed as unit-level, batch level, product -level, or facility level activity.
B. Identify a cost driver for each of the activities that could be used to apply costs to dynamics products.
C. For each activity,identify one or ore traceable costs.
D. Explain how the hierarchy provides insights that affect decision making.
Mallory Chemical Corporation produces two products:A and B. The company;s expected factory overhead costs for the coming year are as follows:
Overhead Category Estimated Costs
Indirect Materials $150,000
Indirect Labor $50,000
Materials handling and storage $200,000
Repairs and Maintenance $200,000
Its expected levels of production activity are as follows:
Product A Product B
Machine Hours 35,000 15,000
Direct Labor 20,000 25,000
Number of unites produced 10,000 5,0000
Direct Materials used, in pounds 75,000 125,000
All labor costs $10 per hour: material cost $1.80 per pound for product A and $2.40 per pound for product B.
A. Calculate the predetermined overhead rate based on direct labor hours and based on machine hours.
B. Calculate the unit cost of each product if overhead is applied on the basis of direct labor hours.
C. Calculate the unit cost of each product if overhead is applied on the basis of machine hours.
D. Compare the unit costs you have just calculated. Why does the choice of an activity base affect unit cost? What implications would the selection of an activity base allocating overhead have on managerial decisions? What factors should management consider in choosing an activity base for assigning costs?
The solution explains classification of activities and the calculation of unit costs