Change the direct laborhour requirement for the Deluxe model

Change the direct labor-hour requirement for the Deluxe model back to 5 hours in cell B10. Assume that the production orders change so that the Deluxe model Will have 230 orders in cell C19 and the Tourist model will have 270 orders in cell D19. The Data area should now look like this:

A

B

C

D

E

F

Expected Activity

$550,000

  

What is the traditional unit product cost for the Deluxe model after this change?

  

Change the direct labor-hour requirement for the Deluxe model back to 5 hours in cell B10. Assume that the production orders change so that the Deluxe model Will have 230 orders in cell C19 and the Tourist model will have 270 orders in cell D19. The Data area should now look like this:

A B C D E F 1 Chapter 3: Applying Excel 2 3 Enter a formula into each of the cells marked with a ? below 4 Review Problem: Activity-Based Costing 5         6 Data 7     Deluxe Tourist 8 Annual sales in units 2,000 10,000 9 Direct materials per unit $25 $17 10 Direct labor-hours per unit 5 4 11 12 Direct labor rate $12 per DLH 13 14 Estimated 15 Overhead Expected Activity 16 Activities and Activity Measures Cost Deluxe Tourist Total 17 Labor related (direct labor-hours) $ 80,000 10,000 40,000 50,000 18 Machine setups (setups) 150,000 3,000 2,000 5,000 19 Production orders (orders) 70,000 230 270 500 20 General factory (machine-hours) 250,000 12,000 28,000 40,000 21 $550,000 22

Solution

CALCULATION OF UNIT COSTING AS PER TRADITIONAL METHOD Particulars Delux Tourist (2, 000 Units) (10,000 Units) Direct Material $25 $17 Direct Labour $60 $48 (5 Hrs X $ 12) (4 Hrs X $ 12) Overhead Cost: $55 $44 (5 Hrs X $ 11) (4 Hrs X $ 11) Total Cost = $140 $109 CALCULATION OF THE RECOVERY RATE OF THE OVERHEAD Total Ovehread = $5,50,000 Total Hours Delux (2000 Units X 5 Hrs Per Unit) 10000 Hrs Tourist (10000 Units X 4 Hrs ) 40000 Hrs Total Hours = 50000 Hrs Recovery Rate = Total Overhead / Total Hours Recovery Rate = Total Overhead = $5,50,000 Divide By \"/\" By Total Hours = $50,000 Hrs Recovery Rate = $11.00 Per Unit