Required Information [The following Information applies to the questions displayed below.] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant. Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best Information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Equipment setup Packaging and shipping Costs $459,360 2,563,600 916,400 487,200 Activity Drivers Direct material cost Machine-hours Production runs Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Products LC-20 $ 626,400 LC-50 $ 487,200 106,865 87 278,400 $ 208,800 $ 243,600 53,360 58 69,600 Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. Required: a. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Complete this question by entering your answers in the tabs below. Required A Required B What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? Note: Do not round intermediate calculations. LC-20 LC-50 Direct labor-hours Direct material costs $ 13,920 626,400 $ 6,960 208,800 Direct labor cost Overhead Total costs Number of units Unit cost

Required Information [The following Information applies to the questions displayed below.] Lauder Company manufactures and distributes various fixtures used primarily in new building construction. At the company's Bayside plant. Lauder produces two models of one widely used fixture designated by model names LC-20 and LC-50. Currently, the Bayside plant uses direct labor-hours to allocate manufacturing overhead costs to products. The vice president-manufacturing (VP-M) at Lauder has recently been considering updates to the company's costing systems as a way to ensure that managers had the best Information available for decision making. However, rather than update throughout the entire firm, the VP-M and CFO agreed to test an ABC system. Because of its size and focus, the Bayside plant was selected for the experiment. An ABC study team, consisting of both plant and corporate employees was formed to propose an ABC system and compare the product costs with those reported by the current system. Based on the experiment, the executives at Lauder will decide whether to roll out the new cost system to the entire company. The study team identified four cost pools into which the manufacturing overhead costs could be grouped. There was a great deal of discussion about both the pools and the cost drivers. The final system selected consisted of the following pools and drivers. The costs were based on the forecasts for the coming year. Cost Pools Material inspection Assembly Equipment setup Packaging and shipping Costs $459,360 2,563,600 916,400 487,200 Activity Drivers Direct material cost Machine-hours Production runs Units shipped Data for production of the two products at the Bayside plant for the coming year of operations follows: Total direct material costs Total direct labor costs Total machine-hours Total number of production runs Products LC-20 $ 626,400 LC-50 $ 487,200 106,865 87 278,400 $ 208,800 $ 243,600 53,360 58 69,600 Number of units produced and shipped All direct labor at the Bayside plant is paid $35 per hour. Required: a. What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? b. What unit product costs will be reported for the two products if the ABC system is used? Complete this question by entering your answers in the tabs below. Required A Required B What unit product costs will be reported for the two products in the coming year if the current cost system continues to be used? Note: Do not round intermediate calculations. LC-20 LC-50 Direct labor-hours Direct material costs $ 13,920 626,400 $ 6,960 208,800 Direct labor cost Overhead Total costs Number of units Unit cost

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 14E: Vargas, Inc., produces industrial machinery. Vargas has a machining department and a group of direct...

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