Chapter 5 - Activity-based costing and management. After completing this chapter, you should be able to: Compute product costs under a traditional, volume-based product-costing system; explain how an activity-based costing system operates, including the use of a two-stage procedure for cost assignment, the identification of activity cost pools, and the selection of cost drivers; explain the concept of cost levels, including unit-level, batch-level, product-sustaining-level,. | Activity-Based Costing and Management Chapter 5 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 5: Activity-Based Costing and Management Traditional, Volume-Based Product-Costing System Aerotech produces three complex printed circuit boards referred to as Mode I, Mode II, and Mode III. The following information is obtained from company records: 5- Aerotech produces three circuit boards referred to as Mode I, Mode II, and Mode III. 10,000 units of Mode I are produced in one run. 20,000 units of Mode II are produced in four runs of 5,000 units. 4,000 units of Mode III are produced in 10 runs of 400 units. (LO1) Traditional, Volume-Based Product-Costing System Additional information includes: Manufacturing overhead is determined as follows 5- In a traditional, job-order product-costing system, the cost of each product is the sum of its actual direct-material cost, actual direct-labor cost, and applied manufacturing overhead. The unit cost for Mode I is $209 which is $50 direct materials cost, $60 direct labor cost, and $99 overhead cost. Mode II unit cost is $302, which is $90 for direct materials, $80 for direct labor, and $132 for overhead. Mode III has a unit cost of $126, which is $20 direct materials cost, $40 direct labor cost, and $66 overhead cost. (LO1) Traditional, Volume-Based Product-Costing System Budgeted manufacturing overhead $3,894,000 Budgeted direct-labor hours 118,000 = $33 per hour 5- Aerotech applies manufacturing overhead using a predetermined overhead rate based on direct-labor hours. The total direct labor hours was estimated to be 118,000. The budgeted manufacturing overhead cost was estimated at $3,894,000. The estimated cost is divided by the estimated hours resulting in a predetermined overhead rate of $33 per hour. The overhead per unit is calculated by multiplying the direct labor hours per unit times the . | Activity-Based Costing and Management Chapter 5 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 5: Activity-Based Costing and Management Traditional, Volume-Based Product-Costing System Aerotech produces three complex printed circuit boards referred to as Mode I, Mode II, and Mode III. The following information is obtained from company records: 5- Aerotech produces three circuit boards referred to as Mode I, Mode II, and Mode III. 10,000 units of Mode I are produced in one run. 20,000 units of Mode II are produced in four runs of 5,000 units. 4,000 units of Mode III are produced in 10 runs of 400 units. (LO1) Traditional, Volume-Based Product-Costing System Additional information includes: Manufacturing overhead is determined as follows 5- In a traditional, job-order product-costing system, the cost of each product is the sum of its actual direct-material cost, .
