E5-28) Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Machine setup Materials handling Electric power Activity Costs $360,000 100,000 40,000 Cost Drivers Setup hours Number of units produced Direct materials cost Direct labor cost Number of setup hours Pounds of materials used Kilowatt-hours Pounds of materials Kilowatt-hours The following cost information pertains to the production of A and B, just two of Hakara's many products: A 4,000 $ 42,000 $ 24,000 400 1,000 2,000 B 20,000 $ 54,000 $ 40,000 200 3,000 4,000 Activity Driver Consumption Required: 1. Use activity-based costing to determine a unit cost for each product 4,000 20,000 40,000
E5-28) Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $10.80 per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Machine setup Materials handling Electric power Activity Costs $360,000 100,000 40,000 Cost Drivers Setup hours Number of units produced Direct materials cost Direct labor cost Number of setup hours Pounds of materials used Kilowatt-hours Pounds of materials Kilowatt-hours The following cost information pertains to the production of A and B, just two of Hakara's many products: A 4,000 $ 42,000 $ 24,000 400 1,000 2,000 B 20,000 $ 54,000 $ 40,000 200 3,000 4,000 Activity Driver Consumption Required: 1. Use activity-based costing to determine a unit cost for each product 4,000 20,000 40,000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 35P: The management of Wheeler Company has decided to develop cost formulas for its major overhead...
Related questions
Question
![E5-28)
Hakara Company has been using direct labor costs as the basis for assigning overhead to its
many products. Under this allocation system, product A has been assigned overhead of $10.80
per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC
system will provide a more accurate allocation of the overhead costs and has collected the
following cost pool and cost driver information:
Cost Pools
Machine setup
Materials handling
Electric power
20
Activity Costs Cost Drivers
$360,000
100,000
40,000
Number of units produced
Direct materials cost
Direct labor cost
Number of setup hours
Pounds of materials used
Kilowatt-hours
Setup hours
Pounds of materials
Kilowatt-hours
products:
The following cost information pertains to the production of A and B, just two of Hakara's many
A
4,000
$ 42,000
$ 24,000
400
1,000
2,000
B
20,000
$ 54,000
$ 40,000
200
3,000
4,000
Activity Driver
Consumption
Required:
1. Use activity-based costing to determine a unit cost for each product
4,000
20,000
40,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffa144e10-0201-45c1-b0a4-2273d7f33f40%2Fbc51c446-bab7-464a-bff7-9ef7c53572bb%2Fr4cu43_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E5-28)
Hakara Company has been using direct labor costs as the basis for assigning overhead to its
many products. Under this allocation system, product A has been assigned overhead of $10.80
per unit, while product B has been assigned $3.60 per unit. Management feels that an ABC
system will provide a more accurate allocation of the overhead costs and has collected the
following cost pool and cost driver information:
Cost Pools
Machine setup
Materials handling
Electric power
20
Activity Costs Cost Drivers
$360,000
100,000
40,000
Number of units produced
Direct materials cost
Direct labor cost
Number of setup hours
Pounds of materials used
Kilowatt-hours
Setup hours
Pounds of materials
Kilowatt-hours
products:
The following cost information pertains to the production of A and B, just two of Hakara's many
A
4,000
$ 42,000
$ 24,000
400
1,000
2,000
B
20,000
$ 54,000
$ 40,000
200
3,000
4,000
Activity Driver
Consumption
Required:
1. Use activity-based costing to determine a unit cost for each product
4,000
20,000
40,000
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College