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Warehouse

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Problem No. 2

A company makes two products: X and Y. During the manufacturing process both products pass through two departments: production and assembly. The direct per unit costs of the products in EUR are as follows:

Product X Y

Material 0.70 1.80
Direct labor (production) 0.80 1.20
Direct labor (assembly) 0.40 0.80

The expected output of the company in January is 10 000 units of Product X and 5 000 units of Product Y. The expected annual output is 200 000 units of Product X and 100 000 units of Product Y.

The expected annual indirect costs have already been allocated between the departments as follows:

Department Annual indirect costs

Production 560 000 EUR
Assembly 240 000 EUR
TOTAL 800 000 EUR

Calculate the full cost per unit for Product X and Product Y using traditional full costing approach (apportioning total overhead based on total direct labor cost) Please briefly explain your calculations.

Problem No. 3

The Busy Ball Company makes two types of bouncing balls; one has a hollow center and the other has a solid center. The same equipment is used to produce the balls in different runs. The hollow center balls are packaged with two balls per package, and the solid center balls are packaged one per package. During the year, Busy Ball expects to make 1,000,000 hollow center balls and 2,000,000 solid center balls. Estimated direct labor costs for the year are $1,512,000, of which $378,000 is for hollow center balls and $1,134,000 is for solid center balls. The overhead costs incurred have been allocated to activity pools as follows: Cost Driver | Activity | Total Cost | Total Expected Units for Cost Driver | Expected Use: Hollow Center | Expected Use: Solid Center | #purchase orders | Purchasing of materials | $200,000 | 100 | 50 | 50 | #setups | Setup of machines | $350,280 | 252 | 126 | 126 | #containers

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