ABC ~ BUAD 305

ABC ~ BUAD 305 - BUAD 305 1 Compute Sly Stone's...

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BUAD 305 1. Compute Sly Stone's predetermined overhead rate for the year. Estimiated Annual Overhead Cost/ Estimated Annual Operating Activity(Direct Labout) = Predetermined overhead rate = $600000/ $300000 = 200% 2. Compute the full production cost (per gallon) of the "Willie Nelson's Country Peach Cobbler" and "Vanilla" products using: a. Sly's old costing method Willie Nelson's Country Peach Cobbler Vamilla Direct Metherial $2.05 $1.65 Direct Labor 1.25 1.25 Manufacturing Overhead 2.5 (1.25*200%) 2.5 (1.25*200%) Production cost per unit $5.80 per gallion $5.40 per gallion b.The new costing method (Mario's suggestion) Activity Cost Pools Estimited Overhead Cost Drivers Activity-Based Overhead Purchasing $80,000 859 orders $93.13 Material Handling 95,000 1806 setups $52.60 Blending 122,000 1100 hours $110.91 Freezing 175,000 1836 hours $95.32 Packaging 110,000 1200 hours $91.67 Quality control 18,000 276 batches $65.22 Total $600,000 Willie Nelson's Country Peach Cobbler Units Rates Cost Assigned Manufacturing Overhead: Purchasing 40 = 2000 / 50 $93.13 $3,725.26 Material Handling 60 = 2000/100 *3 $52.60 $3,156.15 Blending 12 =2000/100*0.6h $110.91 $1,330.91 Freezing 20 =2000/100*1.0h $95.32 $1,906.32 Packaging 6 =2000/100*0.3 $91.67 $550.00 Quality control
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