Activity Cost DriverManufacturingOverhead Aspire Steamer RateMaterial handling Number of parts $1,734,525 35,700 53,250 19.50Machining Machine hours $4,481,100 25,500 21,300 95.75Assembly Units began $2,586,938 5,100 10,650 164.25Inspection Number tested $133,245 1,020 2,130 42.30Aspire SteamerSelling price $1,418 $1,586Direct material cost 445.00 534.00Direct labour cost 130.00 162.50Allocated costsMaterial handling 136.50 97.50Machining 478.75 191.50Assembly 164.25 164.25Inspection 8.46 8.46Total costs 1362.96 1158.21Total profit 55.04$ 427.79$

B) Using the traditional costing and the rate computed in (A), determine:a. the total cost to produce one unit of each product line, andb. the profitability per unit of each product line.Solution:Aspire SteamerDirect materials $445.00 $534.00Direct labour $130.00 $163.00Overhead $190.94 x (25,500/5,100); (21,300/10,650) $954.70 $381.88Total cost per unit $1,529.70 $1,078.88Selling price $1,418.00 $1,586.00Less: costs 1,529.70 1,078.88Profit (loss) per unit -$111.70 $507.12

Strictly Clean Inc. manufactures household industrial washing machines sold at trade shows.The company’s two leading product lines, Aspire and Steamer, are manufactured on a commonassembly line. Although different materials are used, and the machinery is re-tooled for eachproduct, the direct labourers are the same for each product line.Recently the production manager concluded the plantwide rate for allocating manufacturingoverhead on the basis of machine hours to its products is no longer acceptable. He has heardabout activity-based costing and has assembled some information for use in changing the costsystem to a cost driver concept.Per unit data is as follows:RequiredA) Using the traditional costing system, compute the single plantwide overhead rate for theyear.Solution:Plantwide rate = $8,935,808 / (25,500 + 21,300) = $190.94 (rounded)Activity Cost DriverManufacturingOverhead Aspire SteamerMaterial handling Number of parts $1,734,525 35,700 53,250Machining Machine hours $4,481,100 25,500 21,300Assembly Units began $2,586,938 5,100 10,650Inspection Number tested $133,245 1,020 2,130Total manufacturing overhead costs $8,935,808Aspire SteamerExpected production 5,100 10,650Selling price $1,418 $1,586Direct material cost $445 $534Direct labour cost $130 $163

Given the following information, compute the cost driver rate for assembling costs.  ActivityCostsCost DriverAssembling costs$200,000Machine-hoursSetup costs$75,000Number of setupsInspecting costs$50,000Direct labor-hours   ActivityProduct A UseProduct B UseAssembling costs500 machine-hours300 machine-hoursSetup costs10 setups15 setupsInspecting costs25 direct labor-hours15 direct labor-hoursMultiple choice question.$400 per machine-hour$133 per machine-hour$250 per machine-hour$667 per machine-hour

A new manufacturing machine is expected to cost $556,000, have an eight-year life, and a $60,000 salvage value. The machine will yield an annual income of $69,916. Annual depreciation expense is $62,000 per year. Compute the accounting rate of return for the investment.

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.  Standard Quantity Standard Price Standard CostDirect Materials 8 pounds $ 3.70 per pound $ 29.60Direct Labor 0.25 hour $ 11.80 per hour 2.95          $ 32.55During November, TaskMaster purchased 169,500 pounds of direct materials at a total cost of $610,200. The total factory wages for November were $43,900, 90% of which were for direct labor. TaskMaster manufactured 9,200 units of product during November using 69,000 pounds of direct materials and 3,000 direct labor-hours.Is the direct labor efficiency variance favorable or unfavorable?Multiple ChoiceThe variance is zero and is neither favorable nor unfavorable.FavorableUnfavorableThere is not enough information to determine.