Nichols Inc. manufactures remote controls. Currently the company uses a plant- wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Material handling Assembly Inspection Cost driver Number of parts Labour hours Time at inspection station The current traditional cost method allocates overhead based on direct manufacturing abour hours using a rate of £200 per labour hour. a. b. Allocation Rate £2 per part £20 per hour £3 per minute What are the indirect manufacturing costs per remote control assuming an activity- based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labour hours, and 2.5 minutes of inspection time. £4.00 per remote control £6.55 per remote control £24.00 per remote control £327.50 per remote control C. d.
Nichols Inc. manufactures remote controls. Currently the company uses a plant- wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers: Activities Material handling Assembly Inspection Cost driver Number of parts Labour hours Time at inspection station The current traditional cost method allocates overhead based on direct manufacturing abour hours using a rate of £200 per labour hour. a. b. Allocation Rate £2 per part £20 per hour £3 per minute What are the indirect manufacturing costs per remote control assuming an activity- based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labour hours, and 2.5 minutes of inspection time. £4.00 per remote control £6.55 per remote control £24.00 per remote control £327.50 per remote control C. d.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 3PA: Activity-based and department rate product costing and product cost distortions Black and Blue...
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