Chapter 19: 34PGA_1 (page 1077)

The Alright Manufacturing Company in Rochester, Minnesota, assembles and tests electronic components used in smartphones. Consider the following data regarding component T24 (amounts are per unit):
Direct materials cost $ 80.00
Direct labor cost 20.00
Activity-based costs allocated ?
Total manufacturing product cost ?
The activities required to build the component follow:
Activity Allocation Base Cost Allocated to
Each Unit
Start station Number of raw component chassis 4 * $ 1.50 = $ 6.00
Dip insertion Number of dip insertions ? * 0.30 = 9.60
Manual insertion Number of manual insertions 10 * 0.50 = ?
Wave solder Number of components soldered 4 * 1.90 = 7.60
Backload Number of backload insertions 7 * ? = 4.20
Test Number of testing hours 0.43 * 90.00 = ?
Defect analysis Number of defect analysis hours 0.15 * ?= 12.00
Total activity-based costs $ ?
Requirements
1. Complete the missing items for the two tables.

Short Answer

Expert verified

Activity based cost allocated:$83.1

Total manufacturing product cost:$183.1

No. of dip insertion:32

Total Manual insertion cost:$5

Backload unit cost:$0.6

Total test cost:$38.7

Defect analysis unit cost:$8

Step by step solution

Computation of missing figures for activity table

$\begin{matrix} N u m b e r o f d i p i n s e r t i o n = \frac{T o t a l D i p i n s e r t i o n c o s t}{U n i t C o s t} \\ = \frac{$ 9.60}{$ 0.30} \\ = 32 \end{matrix}$

\begin{matrix} T o t a l c o s t o f m a n u a l i n s e r t i o n = N o . o f m a n u a l i n s e r t i o n \times U n i t C o s t \\ = 10 \times $ 0.50 \\ = $ 5 \end{matrix}

\begin{matrix} U n i t c o s t f o r b a c k l o a d = \frac{T o t a l c o s t}{N o . o f b a c k l o a d i n s e r t i o n} \\ = \frac{$ 4.2}{7} \\ = $ 0.6 \end{matrix}

\begin{matrix} T o t a l t e s t c o s t = N o . o f t e s t i n g h o u r s \times U n i t C o s t \\ = 0.43 \times $ 90 \\ = $ 38.7 \end{matrix}

\begin{matrix} U n i t c o s t f o r d e f e c t a n a l y s i s = \frac{T o t a l c o s t}{N o . o f a n a l y s i s h o u r} \\ = \frac{$ 12}{0.15} \\ = $ 80 \end{matrix}

Computation of missing figure for component T24

$\begin{matrix} A c t i v i t y b a s e d c o s t a l l o c a t e d = S t a r t s t a t i o n c o s t + D i p i n s e r t i o n c o s t + M a n u a l i n s e r t i o n c o s t + W a v e s o l d e r c o s t + B a c k l o a d c o s t + T e a s t c o s t + D e f e c t a n a l y s i s c o s t \\ = $ 6 + $ 9.6 + $ 5 + $ 7.6 + $ 4.2 + $ 38.7 + $ 12 \\ = $ 83.1 \end{matrix} \begin{matrix} T o t a l m a n u f a c t u r i n g p r o d u c t c o s t = A c t i v i t y b a s e d c o s t a l l o c a t e d + D i r e c t M a t e r i a l c o s t + D i r e c t l a b o r c o s t \\ = $ 83.1 + $ 80 + $ 20 \\ = $ 183.1 \end{matrix}$

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Computation of missing figures for activity table

Computation of missing figure for component T24

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