This assignment will allow you to practice applying activity-based costing (ABC), which includes classifying activities on a unit level, batch level, product level, or facility level; computing activity overhead rates using ABC; and determining overhead cost per unit based on given information.
Use a Word document to complete the following in your Financial and Managerial Accounting textbook:
● Exercise 17-1, “Computing Plantwide Overhead Rates,” page 789 (bottom of the page).
● Exercise 17-3, “Assigning Costs Using ABC,” page 790.
● Exercise 17-4, “Plantwide Overhead Rate,” page 790.
Exercise 17-1 Computing plantwide overhead rates P1
Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: deluxe and ba
1. Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.
2. In January 2017, the deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.
Exercise 17-3 Assigning costs using ABC P3
Refer to the information in Exercise 17-1. Assume that the following information is available for the company’s two products for the first quarter of 2017.
Compute activity rates for each activity and assign overhead costs to each product model using activity-based costing (ABC). What is the overhead cost per unit of each model?
Exercise 17-4 Plantwide overhead rate P1
Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2017 follow.
Data for two special order parts to be manufactured by the company in 2017 follow.
1. Compute the plantwide overhead rate using direct labor hours as the base.
2. Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1.
Use the Comparing Costs Using ABC Template linked in the resources to complete the following in your Financial and Managerial Accounting textbook:
● Problem 17-3B, page 800.
Review the Comparing Costs Using Activity-Based Costing Scoring Guide to ensure you have met the criteria for this assignment prior to submission. Submit your completed problem in the assignment
Ryan Foods produces gourmet gift baskets that it distributes online as well as from its small retail store. The following details about overhead costs are taken from its records.
Additional information on the drivers for its production activities follows.
1. Classify each activity as unit level, batch level, product level, or facility level.
2. Compute the activity overhead rates using ABC. Combine the assembling and quality inspection activities into a single cost pool.
3. Determine the overhead costs to assign to the following jobs using ABC.
1. What is the overhead cost per unit for the Holiday Basket? What is the overhead cost per unit for the Executive Basket?
Check (4) Holiday Basket, $14.25 per unit
2. If the company used a plantwide overhead rate based on direct labor hours, what is the overhead cost for each Holiday Basket unit? What would be the overhead cost for each Executive Basket unit if a single plantwide overhead rate were used?
(5) Holiday Basket, $18.13 per unit
3. Compare the costs per unit computed in requirements 4 and 5 for each job. Which cost assignment method provides the most accurate cost? Explain.
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