Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

تمرين 40

Plantwide versus Departmental Rates, Product-Costing Accuracy: Activity-Based Costing
Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data have been gathered for the two products:

Required:
1. Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours. ( Note : Round to two decimal places.)
2. Compute the overhead cost per unit for each product by using ABC. ( Note: Round rates and unit overhead cost to two decimal places.)
3. Suppose that Ramsey decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $3.50 per machine hour and Department 2 (labor intensive) with a rate of $0.90 per direct labor hour. The consumption of these two drivers is as follows:

Compute the overhead cost per unit for each product by using departmental rates. ( Note: Round to two decimal places.)
4. CONCEPTUAL CONNECTION Using the activity-based product costs as the standard, comment on the ability of departmental rates to improve the accuracy of product costing. Did the departmental rates do better than the plantwide rate?