Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $500,000 Setup 144,000 Inspection 44,000 Shipping 115,000 Customer Service 84,000 Total $887,000 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer Service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number of Setups Number of Inspections Number of Customer Orders Customer Service Requests Units White sugar 5,000 85 220 1,150 60 10,000 Brown sugar 2,500 170 330 2,600 350 5,000 Powdered sugar 2,500 195 550 2,000 190 5,000 Total 10,000 450 1,100 5,750 600 20,000 Each product requires 0.5 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. A. Determine the activity rate for each activity. Production per machine hour Setup per setup Inspection per inspection Shipping per cust. ord. Customer service per customer service request B.Determine the total and per-unit activity cost for all three products. Total Activity Cost Activity Cost Per Unit White sugar $fill in the blank $fill in the blank Brown sugar fill in the blank fill in the blank Powdered sugar fill in the blank fill in the blank C.Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit? The unit costs are different because the products consume many activities in ratios different from the ....

Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Budgeted Activity Cost Production $500,000 Setup 144,000 Inspection 44,000 Shipping 115,000 Customer Service 84,000 Total $887,000 The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer Service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Machine Hours Number of Setups Number of Inspections Number of Customer Orders Customer Service Requests Units White sugar 5,000 85 220 1,150 60 10,000 Brown sugar 2,500 170 330 2,600 350 5,000 Powdered sugar 2,500 195 550 2,000 190 5,000 Total 10,000 450 1,100 5,750 600 20,000 Each product requires 0.5 machine hour per unit. Required: If required, round all per unit amounts to the nearest cent. A. Determine the activity rate for each activity. Production per machine hour Setup per setup Inspection per inspection Shipping per cust. ord. Customer service per customer service request B.Determine the total and per-unit activity cost for all three products. Total Activity Cost Activity Cost Per Unit White sugar $fill in the blank $fill in the blank Brown sugar fill in the blank fill in the blank Powdered sugar fill in the blank fill in the blank C.Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit? The unit costs are different because the products consume many activities in ratios different from the ....

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 4PB: Activity-based product costing Sweet Sugar Company manufactures three products (white sugar, brown...

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1-Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

Activity	Budgeted Activity Cost
Production		$500,000
Setup		144,000
Inspection		44,000
Shipping		115,000
Customer Service		84,000
	Total		$887,000

The activity bases identified for each activity are as follows:

Activity	Activity Base
Production	Machine hours
Setup	Number of setups
Inspection	Number of inspections
Shipping	Number of customer orders
Customer Service	Number of customer service requests

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:

		Machine Hours		Number of Setups		Number of Inspections		Number of Customer Orders	Customer Service Requests	Units
White sugar	5,000			85			220		1,150		60	10,000
Brown sugar	2,500	170	330	2,600	350	5,000
Powdered sugar	2,500	195	550	2,000	190	5,000
	Total	10,000	450	1,100	5,750	600	20,000

Each product requires 0.5 machine hour per unit.

Required:

If required, round all per unit amounts to the nearest cent.

A. Determine the activity rate for each activity.

Production	per machine hour
Setup	per setup
Inspection	per inspection
Shipping	per cust. ord.
Customer service	per customer service request

B.Determine the total and per-unit activity cost for all three products.

	Total Activity Cost	Activity Cost Per Unit
White sugar	$fill in the blank	$fill in the blank
Brown sugar	fill in the blank	fill in the blank
Powdered sugar	fill in the blank	fill in the blank

C.Why aren’t the activity unit costs equal across all three products since they require the same machine time per unit?

The unit costs are different because the products consume many activities in ratios different from the ....

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