ACCT 338- V2C - Intro Management Accounting - FALL 2023 Raj Kanwar Singh 11/07/23 6:12 PM

Question 5, Exercise 5-20 HW Score: 100%, 32 of 32

Homework: Chapter #5 (similar to) points
Part 7 of 7 Points: 10 of 10 Save

Sullivan Company produces mathematical and financial calculators and operates at capacity. Data related to the two
Question list products follows.

(Click the icon to view the data.)

Total manufacturing overhead costs are provided.

Question 1
(Click the icon to view the total manufacturing overhead costs.)
Required

Question 2

Question 3 Requirement 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per
unit for each product.

Begin by choosing a cost driver for each overhead cost pool. (Round your answers to the nearest cent.)
Question 4
Activity Cost driver Rate

Machining Machine-hours $ 4.40 per machine-hour

Question 5 Setup Production runs $ 1,100.00 per production run

Inspection Inspection-hours $ 66.00 per inspection-hour

Determine the formula to calculate the overhead allocated to each product.

Overhead allocated to
Product cost driver quantity x Indirect-cost rate = product

Now calculate the total overhead allocated to each product and the overhead cost per unit. (Round total costs to the
nearest dollar. Round the number of direct-labour hours or units to the nearest whole number. Round the
manufacturing overhead costs per unit to the nearest cent.)

Mathematical Financial

Machining costs $ 101,200 $ 202,400

Setup costs 50,600 50,600

Inspection costs 92,400 46,200

Total overhead costs $ 244,200 $ 299,200

Divide by number of units 46,000 92,000

$ 5.31 $ 3.25
Manufacturing overhead cost per unit

Requirement 2. Compute the manufacturing cost per unit for each product.

Determine the formula to compute the direct costs per unit.

Direct cost of product / Units produced of product = Direct cost per unit

Now calculate the manufacturing cost per unit for each product. (Round your answers to the nearest cent.)

Mathematical Financial
Direct materials per unit $ 4.60 $ 4.60
Direct labour per unit 1.90 1.90

Manufacturing overhead per unit 5.31 3.25

$ 11.81 $ 9.75
Manufacturing cost per unit

Requirement 3. How might Sullivan's managers use the new cost information from its activity-based costing system
to better manage its business?

Select all that apply.

A. Managers can use this information to devise employee compensation packages.

B. Managers can use this information to improve advertising campaigns and the company's public image.

C. Managers can use this information for pricing and product-mix decisions and for cost reduction
and process-improvement decisions.

D. Managers can use this information for design decisions and to plan and manage activities.

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