Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. They use these designs for one year and then move on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows: Required 1. Calculate the cost per unit of cost driver for each cost category. 2. Calculate the total costs and cost per unit for each product line. 3. Explain how you could use the information in requirement 4 to reduce costs.

Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. They use these designs for one year and then move on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows: Required 1. Calculate the cost per unit of cost driver for each cost category. 2. Calculate the total costs and cost per unit for each product line. 3. Explain how you could use the information in requirement 4 to reduce costs.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 32P: Refer to the data in Problem 6.31. Assume that the FIFO method is used. Required: 1. Prepare a...

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es D ♪ Mc Graw Classes N Netflix Activity Assembly Product design Electricity Setup Total Craftmore Machining reports the following budgeted overhead cost and related data for this year. Budgeted Cost $ 477,750 73,500 24,500 61,250 $ 637,000 Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Required 1 25 Required 2 Dashboard Activity Cost Driver Direct labor hours (DLH) Engineering hours (EH) Machine hours (MH) Setups Required: 1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours. 2. Job 31 used 320 direct labor hours and Job 42 used 560 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1. 3. Compute an activity rate for each activity using activity-based costing. 4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing. 80 Job 31 Activity Usage Required 3 320 35 60 5 Complete this question by…