Coronado makes two products, Simple and Complex. As their names suggest, Simple is the more...
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Accounting
Coronado makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes with all the bells and whistles. The company has always allocated overhead costs to products based on machine hours. Last year, the company implemented an activity-based costing system, and managers determined the following activity pools and rates based on total overhead of $2,310,000:
Rate
Assembly
$0.80 per direct labor hour
Fabrication
$15 per machine hour
Setups
$20 per batch
Bonding
$230,000 direct to Complex
Only the Complex product requires bonding, so all the costs of bonding should be allocated to Complex. The following data relate to both products.
Simple
Complex
Units produced
100,000
40,000
Direct labor hours
240,000
160,000
Machine hours
80,000
30,000
Batches
1,500
4,000
(a)
Your answer is correct.
Using the traditional method of allocating overhead costs,
allocate overhead cost to the products.
show that the overhead assigned to each product sums to the total company overhead.
determine the overhead cost per unit for each product.
(Round overhead rate and overhead per unit answers to 2 decimal places, e.g. 15.25.)
Simple
Complex
Total
Machine hours
80000
30000
Overhead rate
21
21
Total overhead to product
1680000
630000
231000
Simple
Complex
Total overhead to product
1680000
630000
Number of units produced
100000
40000
Overhead per unit
16.80
15.75
(b)
Using the activity-based costing rates,
allocate overhead cost to the products.
show that the overhead assigned to each product sums to the total company overhead.
determine the overhead cost per unit for each product.
(Round per unit answers to 2 decimal places, e.g. 15.25.)
Simple
Complex
Total
Assembly
$enter a dollar amount
$enter a dollar amount
Fabrication
enter a dollar amount
enter a dollar amount
Setups
enter a dollar amount
enter a dollar amount
Bonding
enter a dollar amount
enter a dollar amount
Total overhead
$enter a total amount
$enter a total amount
$
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