Lauren's Volleyball Company produces two types of volleyballs: Volleylite and Official Game. Both products pass through two producing departments. The Official Game production is much more labour-intensive than the Volleylite. The Volleylite is also more popular. The following data have been gathered for the two products: $\begin{array}{lrr}&\text { Product Data }\
& \text { Official Game } & \text { Volleylite } \
\text { Units produced per year }& 20,000 & 200,000 \
\text { Machine hours } & 10,000 & 40,000 \
\text { Packing orders }& 30,000 & 30,000
\end{array}$ Lauren's Volleyball has decided to use activity-based costing and has developed two types of activities, machine related (based on machine hours), and other manufacturing overhead (based on packing orders). Machine-related costs equal $160,000. Other manufacturing overhead costs equal $240,000.
A. Calculate the activity rate for machine-related costs based on machine hours.
B. Calculate the activity rate for other manufacturing overhead costs based on packing orders.
C. Using the two activity rates, calculate the manufacturing overhead cost per unit for Official Game.
D. Using the two activity rates, calculate the manufacturing overhead cost per unit for Volleylite.

Question

Lauren's Volleyball Company produces two types of volleyballs: Volleylite and Official Game. Both products pass through two producing departments. The Official Game production is much more labour-intensive than the Volleylite. The Volleylite is also more popular. The following data have been gathered for the two products: $\begin{array}{lrr}&\text { Product Data }\
 & \text { Official Game } & \text { Volleylite } \
\text { Units produced per year }& 20,000 & 200,000 \
\text { Machine hours }  & 10,000 & 40,000 \
\text { Packing orders }& 30,000 & 30,000
\end{array}$ Lauren's Volleyball has decided to use activity-based costing and has developed two types of activities, machine related (based on machine hours), and other manufacturing overhead (based on packing orders). Machine-related costs equal $160,000. Other manufacturing overhead costs equal $240,000.
A. Calculate the activity rate for machine-related costs based on machine hours.
B. Calculate the activity rate for other manufacturing overhead costs based on packing orders.
C. Using the two activity rates, calculate the manufacturing overhead cost per unit for Official Game.
D. Using the two activity rates, calculate the manufacturing overhead cost per unit for Volleylite.

Quizplus · Accepted Answer

The Answer of Lauren's Volleyball Company produces two types of volleyballs: Volleylite and Official Game. Both products pass through two producing departments. The Official Game production is much more labour-intensive than the Volleylite. The Volleylite is also more popular. The following data have been gathered for the two products: $\begin{array}{lrr}&\text { Product Data }\
 & \text { Official Game } & \text { Volleylite } \
\text { Units produced per year }& 20,000 & 200,000 \
\text { Machine hours }  & 10,000 & 40,000 \
\text { Packing orders }& 30,000 & 30,000
\end{array}$ Lauren's Volleyball has decided to use activity-based costing and has developed two types of activities, machine related (based on machine hours), and other manufacturing overhead (based on packing orders). Machine-related costs equal $160,000. Other manufacturing overhead costs equal $240,000.
A. Calculate the activity rate for machine-related costs based on machine hours.
B. Calculate the activity rate for other manufacturing overhead costs based on packing orders.
C. Using the two activity rates, calculate the manufacturing overhead cost per unit for Official Game.
D. Using the two activity rates, calculate the manufacturing overhead cost per unit for Volleylite.

Lauren's Volleyball Company Produces Two Types of Volleyballs: Volleylite and Official