Problem A. Wyoming Company manufactures radios in two different styles: Radio Model Annual Sales in Units Starry 10,000 Polka 16,000 Wyoming uses a traditional volume-based costing system in applying...

Problem A.

Wyoming Company manufactures radios in two different styles:

                 Radio Model                         Annual Sales in Units

Starry                                                      10,000

Polka   16,000

Wyoming uses a traditional volume-based costing system in applying factory overhead using direct labor pesos. The unit prime costs of each product were as follows:

                                                    Starry                    Polka

The predetermined overhead rate was P350% (P1,349,040 ÷ 385,440) Direct labor budget per annual sales:

Factory overhead:

Wyoming’s controller had been researching activity-based costing and decided to switch to it. A special study determined Wyoming’s two radio models were responsible for the following proportions of each cost driver:

Required. Compute the following:

1. Applied factory overhead per unit for the Starry Model under traditional costing.


2. Applied factory overhead per unit for the Polka Model under traditional costing.


3. Applied factory overhead per unit for the Starry Model based on Engineering and design, under ABC system.


4. Applied factory overhead per unit for the Starry Model based on Quality Control, under ABC system.


5. Applied factory overhead per unit for the Starry Model based on Machinery, under ABC system


6. Applied factory overhead per unit for the Starry Model based on Miscellaneous Overhead, under ABC system


7. Applied factory overhead per unit for the Polka Model based on Engineering and Design, under ABC system


8. Applied factory overhead per unit for the Polka Model based on Quality Control under ABC system


9. Applied factory overhead per unit for the Polka Model based on Machinery, under ABC system


10. Applied factory overhead per unit for the Polka Model based on Miscellaneous Overhead, under ABC system

PROBLEM B.

Crown Modules Inc. manufactures dining chairs and tables. The following information is available:

Crown Modules is considering switching from one overhead rate based on labor hours to activity-based costing.

Required.

1. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.


2. Compute total machine setups and inspection costs assigned to each product, using activity-based costing.