Module 04: 500

I’m trying to study for my Accounting course and I need some help to understand this question.

CRITICAL THINKING ASSIGNMENT :

Complete the following questions using Microsoft Excel. No other submission format is allowed. Review the grading rubric to confirm you are meeting the assignment requirements.

Consider the following information for Hamburg Corporation:

Units
Beginning inventory 80,000
Units started during the year 150,000
Ending inventory 62,000

Inventory is 100% complete as to materials and 60% complete as to conversion.

Materials Conversion
Beginning costs (SAR) 420,000 687,000
Costs added during the period (SAR) 1,250,000 983,000

Using the WEIGHTED AVERAGE method:

  1. Calculate the number of units completed during the period.
  2. Calculate equivalent units for conversion during the period.
  3. Calculate cost per equivalent units for Materials.

Mannheim Corporation manufactures small camping tents and family camping tents. Estimated direct labor time to produce each type of tent is as follows:

Small Family
Estimated tents produced 25,000 10,000
Direct labor hours per tent 2 5

Estimated overhead for the period = 1,200,000 SAR.

  1. Compute the overhead cost assigned to each type of tent assuming direct labor hours are used to allocate overhead costs.

The controller is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the family tent product line because of its complexity. He therefore developed the following three activity cost pools and related cost drivers to better understand the costs.

Activity Cost Pools Expected Use of Cost Drivers Estimated Overhead Costs (SAR)
Setting up machines 1,000 setups 220,000
Assembling 90,000 labor hours 990,000
Inspection 1,200 inspections 240,000
  1. Calculate the activity-based overhead rates for these three cost pools.
  2. Compute the cost that is assigned to each bicycle product line using activity-based costing system, given the following information.
Expected Use of Cost Drivers per Product
Small Family
Number of setups 150 850
Direct labor hours 30,000 60,000
Number of inspections 100 1,100
  1. What do you believe the controller should do and why?

You must show your work for credit.