Managerial Accounting Homework.

Activity Cost Rates

P 3. Noir Company produces four versions of its model J17-21 bicycle seat. The

four versions have different shapes, but their processing operations and production

costs are identical. During July, these costs were incurred:

Direct materials

Leather $25,430

Metal frame 39,180

Bolts 3,010

Materials handling

Labor 8,232

Equipment depreciation 4,410

Electrical power 2,460

Maintenance 5,184

Assembly

Direct labor 13,230

Engineering design

Labor 4,116

Electrical power 1,176

Engineering overhead 7,644

Overhead

Equipment depreciation 7,056

Indirect labor 30,870

Supervision 17,640

Operating supplies 4,410

Electrical power 10,584

Repairs and maintenance 21,168

Building occupancy overhead 52,920

July’s output totaled 29,400 units. Each unit requires three machine hours of

effort. Materials handling costs are allocated to the products based on direct

materials cost, engineering design costs are allocated based on units produced,

and overhead is allocated based on machine hours. Assembly costs are allocated

based on direct labor hours, which are estimated at 882 for July.

During July, Noir Company completed 520 bicycle seats for Job 142. The

activity usage for Job 142 was as follows: direct materials, $1,150; direct labor

hours, 15.

Required

1. Compute the following activity cost rates: (a) materials handling cost rate;

(b) assembly cost rate, (c) engineering design cost rate, and (d) overhead rate.

2. Prepare a bill of activities for Job 142.

3. Use activity-based costing to compute the job’s total cost and product unit cost.

  

Breakeven Analysis

 

E 8. Techno Designs produces head covers for golf clubs. The company expects to

 

generate a profit next year. It anticipates fixed manufacturing costs of $126,500

 

and fixed general and administrative expenses of $82,030 for the year. Variable

 

manufacturing and selling costs per set of head covers will be $4.65 and $2.75,

 

respectively. Each set will sell for $13.40.

 

1. Compute the breakeven point in sales units.

 

2. Compute the breakeven point in sales dollars.

 

3. If the selling price is increased to $14 per unit and fixed general and administrative

 

expenses are cut by $33,465, what will the new breakeven point be

 

in units?

 

4. Prepare a graph to illustrate the breakeven point computed in
2.

       

Ch22 P3

(

3

)

(Continued)

.

Job 142
Activity

Rate

Cost

materials

direct labor — 0

— 0

— 0

520 units)

— 0

per unit (total activity costs

total units)

Activity costs — 0

$ — 0

$ — 0

Chapter 22, P

3.

2 and 3.

Bill of activities prepared and activity-based costing applied to

Job 142

Noir Company

Bill of Activities

Activity

Activity

Cost

Cost Driver Level

Unit level

Materials

per dollar of

materials

$

— 0

handling

Assembly

per

direct labor

hour

hours

Batch level

None

Product level

Engineering

per unit

units

design

Facility level

Overhead

per machine hour

machine hours

(3 MH

×

Total activity costs assigned to job

$ — 0

Total units of job

Activity costs

¸

$ — 0

Cost summary

Direct materials

$ — 0

Total cost of order

Product unit cost (total cost of order ¸ 520 units)

* Rounded

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¸
*
*
*
*

Ch22 P3

Chapter 22, P 3.

$ — 0

$ — 0

Materials handling cost rate
$ — 0 ¸ $ — 0

computed

Assembly cost rate

¸

=

computed

Labor
Electrical power

$ — 0

Engineering design cost rate
$ — 0 ¸

$ — 0 per unit

1.

Activity cost rates compute

d.

a.

Materials handling cost rate

Direct materials:

Leather

Metal frame

Bolts

Total direct materials cost

Materials handling:

Labor

Equipment depreciation

Electrical power

Maintenance

Total materials handling cost

=

0%

per dollar of direct materials

b.

Assembly cost rate

Assembly:

Direct labor

$13,230

882

direct labor hours

$15

per direct labor hour

c.

Engineering design cost rate

Engineering design:

Engineering overhead

Total engineering design cost

29,400

units =

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Ch22 P3 (2)

d.

computed

Equipment depreciation

Electrical power

$ — 0

×

— 0 machine hours

Overhead rate
$ — 0 ¸ — 0

$ — 0 per machine hour

Chapter 22, P 3. (Continued)
	Overhead rate
Overhead:
Indirect labor
Supervision
Operating supplies
Repairs and maintenance
Building occupancy overhead
Total overhead cost
Machine hours
hours per unit =
machine hours =

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Ch23 E8

1.

=

=

( + )

= $ — 0

$ — 0

= — 0

= BE Units ×

= — 0 × $ — 0
= $ — 0
3.

BE Units = FC
CM per Unit
= $ — 0 +
– ( $ — 0 + $ — 0 )

= $ — 0
$ — 0

= — 0 Sets

Chapter 23, E 8.
Breakeven units computed.
		BE Units		FC
	CM per Unit
			+
	–
	Sets
2.	Breakeven dollars computed.
BE Dollars	Selling Price per Set
New breakeven units computed.

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