Exercise 7-49 Product-Costing Accuracy, Consumption Ratios, Activity Rates, Activity Costing
Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been
(Continued)
identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:
Product Machine Hours Setups Receiving Orders Packing Orders
|
Infantry
|
20,000
|
300
|
900
|
1,600
|
|
Special forces
|
20,000
|
100
|
100
|
800
|
|
Costs
|
$80,000
|
$24,000
|
$18,000
|
$30,000
|
Required:
1. Calculate the total overhead assigned to each product by using only machine hours to calcu- late a plantwide rate.
2. Calculate consumption ratios for each activity. (Round to two significant digits.)
3. Calculate a rate for each activity by using the associated driver.
4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3.
5. CONCEPTUAL CONNECTION Comment on the difference between the assignment in Requirement 1 and the activity-based assignment.