J25p j40x direct material 1505000 2410000 direct

J25P J40X
Direct material $1,505,000 $2,410,000
Direct labor
Assembly $ 755,000 $ 610,000
Packaging 995,000 370,000
Total direct labor $1,750,000 $ 980,000
Direct costs $3,255,000 $3,390,000
Overhead
Assembly building
Assembling (@ $30 per mh) $ 190,000 $ 910,000
Setting up machine (@ $900 per setup hour) 38,500 365,000
Handling material (@ $3,000 per run) 26,500 125,000
Packaging building
Inspecting and Packing (@ $5 per direct labor-hour) 310,000 119,000
Shipping (@ $1,320 per shipment) 137,000 274,000
Total ABC overhead $ 702,000 $1,793,000
Total ABC cost $3,957,000 $5,183,000
Number of units 105,000 42,500
Unit cost $ 37.69 $ 121.95
Required:
Compute the amount of overhead allocated to the J25P and the J40X cameras for the first quarter using
activity-based costing. Assume that all events are the same in the first quarter as in the third quarter except for
the number of setup hours. Assume the cost of a setup hour remains at $900.
Total ABC Overhead
J25P $690,450
J40X $1,683,500

Setting up machine ($26,950 = 0.70 × $38,500; $255,500 = 0.70 × $365,000).
4. Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the
company’s two versions of a special reel used for river fishing. The two models are the M-008, a basic reel,
and the M-123, a new and improved version. Cost accountants at company headquarters have prepared costs
for the two reels for the most recent period. The plant manager is concerned. The cost report does not coincide
with her intuition about the relative costs of the two models. She has asked you to review the cost accounting
and help her prepare a response to headquarters.
Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent
month, manufacturing overhead was $287,200. During that time, the company produced 12,200 units of the M-
008 and 2,300 units of the M-123. The direct costs of production were as follows:
M-008 M-123 Total
Direct materials $97,600 $92,000 $189,600
Direct labor 97,600 46,000 143,600
Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for
last year were as follows:
Activity Level
Cost Driver Costs M-008 M-123 Total
Number of machine-hours $113,700 8,000 2,000 10,000
Number of production runs 80,000 10 30
Number of inspections 93,500 25 30
Total overhead $287,200
Required:
a. How much overhead will be assigned to each product if these three cost drivers are used to allocate
overhead? What is the total cost per unit produced for each product? (Round your intermediate calculations
and final answers to 2 decimal places.)
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