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Armstrong Company uses activity-based costing to calculate product costs

Armstrong Company uses activity-based costing to calculate product costs.

 

A.Calculate the per unit product cost for a mountain bike.

B.Calculate the per unit product cost for a racing bike.

C.Assume Armstrong Company adds 40% to the cost of a mountain bike and 35% to the cost of a racing bike obtain the selling prices. Calculate the selling prices for a mountain bike and a racing bike.

 

 

 

8.Randy Company produces candy sticks (hooked and straight). Both products pass through two producing departments. The hooked stick’s production is much more labour-intensive than the straight sticks. The straight stick is also more popular. The following data have been gathered for the two products:

 

Product Data

     HookedStraight

Units produced per year200,0002,000,000

Machine hours10,00040,000

Packing orders30,00030,000

 

Randy has decided to used activity-based costing and has developed two types of activities, machine related (based on machine hours), and other overhead (based on packing orders). Machine-related costs equal $160,000. Other overhead costs equal $240,000.

 

A.Calculate the activity rate for machine-related costs based on machine hours.

B.Calculate the activity rate for other overhead costs based on packing orders.

C.Using the two activity rates, calculate the overhead cost per unit for hooked sticks. (Carry out computations to three decimal places.)

D.Using the two activity rates, calculate the overhead cost per unit for straight sticks. (Carry out computations to three decimal places.)

 

 

 

Sallisaw Savings & Loan has requested an analysis of chequing account profitability by customer type. Customers are categorized according to size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows:

 

Opening and closing statements$   100,000

Issuing monthly statements$   150,000

Processing transactions$1,025,000

Customer inquiries$   200,000

Providing ATM services$   560,000

Total cost$2,035,000

 

Additional data concerning the usage of the activities by the various customers are also provided:

 

Account Balance

     Low  Medium     High

Number of accounts opened/closed7,5001,5001,000

Number of statements issued225,00050,00025,000

Processing transactions9,000,0001,000,000250,000

Number of telephone minutes500,000300,000200,000

Number of ATM transactions675,000100,00025,000

Number of chequing accounts19,0004,0002,000

 

 

9.Refer to Sallisaw Savings & Loan.

 

A.Calculate the total number of chequing accounts.

B.Calculate the yearly overall cost per chequing account.

C.Calculate the monthly overall cost per chequing account.

Mar 13 2020 View more View Less

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