34PGA_1 - Horngren'S Financial And Managerial Accounting

Question

The Alright Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in smartphones. Consider the following data regarding component T24 (amounts are per unit):

                   Direct materials cost                                \( 80.00

                   Direct labor cost                                          20.00

                   Activity-based costs allocated                 ?

   Total manufacturing product cost           ?

 

The activities required to build the component follow:

 

        Activity                    Allocation Base                                    Cost Allocated to                          

                                                                                                     Each Unit

Start station            Number of raw component chassis            4 * \) 1.50 = \( 6.00

Dip insertion           Number of dip insertions           ? * 0.30 = 9.60

Manual insertion    Number of manual insertions                               10 * 0.50 = ?

Wave solder            Number of components soldered                     4 * 1.90 = 7.60

Backload                 Number of backload insertions                              7 * ? = 4.20

Test                          Number of testing hours                                  0.43 * 90.00 = ?

Defect analysis       Number of defect analysis hours                   0.15 * ?= 12.00

Total activity-based costs                                                                               \) ?

 

Requirements

1. Complete the missing items for the two tables.

Step-by-Step Solution

Answer

Activity based cost allocated:$83.1

Total manufacturing product cost:$183.1

No. of dip insertion:32

Total Manual insertion cost:$5 

Backload unit cost:$0.6

Total test cost:$38.7

Defect analysis unit cost:$8

Computation of missing figures for activity table

$\begin{array}{c}Numberofdipinsertion=\frac{TotalDipinsertioncost}{UnitCost}\\ =\frac{\$9.60}{\$0.30}\\ =32\end{array}$

$\begin{array}{c}Totalcostofmanualinsertion=No.ofmanualinsertion\times UnitCost\\ =10\times \$0.50\\ =\$5\end{array}$

$\begin{array}{c}Unitcostforbackload=\frac{Totalcost}{No.ofbackloadinsertion}\\ =\frac{\$4.2}{7}\\ =\$0.6\end{array}$

$\begin{array}{c}Totaltestcost=No.oftestinghours\times UnitCost\\ =0.43\times \$90\\ =\$38.7\end{array}$

$\begin{array}{c}Unitcostfordefectanalysis=\frac{Totalcost}{No.ofanalysishour}\\ =\frac{\$12}{0.15}\\ =\$80\end{array}$

Computation of missing figure for component T24

$$\begin{gathered} \begin{array}{c}Activitybasedcostallocated=Startstationcost+Dipinsertioncost+Manualinsertioncost+Wavesoldercost+Backloadcost+Teastcost+Defectanalysiscost\\ =\$6+\$9.6+\$5+\$7.6+\$4.2+\$38.7+\$12\\ =\$83.1\end{array} \\ \begin{array}{c}Totalmanufacturingproductcost=Activitybasedcostallocated+DirectMaterialcost+Directlaborcost\\ =\$83.1+\$80+\$20\\ =\$183.1\end{array} \end{gathered}$$