Ch 7 Practice

# Prime costs 900000 1200000 activity fabrication 5000

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Prime costs £900,000 £1,200,000 Activity: Fabrication 5,000 DLH 6,000 DLH Assembly 9,000 MH 12,000 MH Units produced 7,000 4,000 Required : a. Assume that Rounders applies overhead using a plantwide rate based on direct labour hours. Determine the unit cost of Products 1 and 2. b. Assume that Rounders uses direct labour hours to apply overhead in the Fabrication Department and machine hours to apply overhead in the Assembly Department. Determine the unit cost of Products 1 and 2. ANSWER: a. Unit cost for Product 1: £151.49 per unit (rounded) Unit cost for Product 2: £348.12 per unit Product 1 Product 2 Prime costs £ 900,000 £1,200,000 Overhead applied: 5,000 DLH x £32.08* 160,400 6,000 DLH x £32.08* 192,480 Total cost £1,060,400 £1,392,480 Page 9

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Chapter 7 - Cost Assignment 33) Crow Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Mixing Department and based on budgeted labour hours in the Packaging Department. Variable cafeteria costs are allocated to the producing departments based on budgeted number of employees, and fixed costs are allocated based on the capacity number of employees. Variable maintenance costs

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• Spring '13
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