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  • MAC Assignemet Seimens

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    p23adityaprakash
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    The document reports the costs per unit for 5 orders (A-E) under a new and old manufacturing system. Under the new system, the total cost per unit is broken down into base motor cost, component costs, order processing costs, and component handling costs. The order processing cost is a fixed $210.3 per unit and component handling cost is $60 per unit. Under the old system, total cost includes base motor, components, and a combined support and overhead cost that is allocated as 35% of manufacturing expenses. The costs per unit are higher under the old system because support overhead is allocated differently between order processing and component handling costs under the new system.

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    Mac It is a solution on process costing

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    MAC Assignemet Seimens (1)

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    The document reports the costs per unit for 5 orders (A-E) under a new and old manufacturing system. Under the new system, the total cost per unit is broken down into base motor cost, component costs, order processing costs, and component handling costs. The order processing cost is a fixed $210.3 per unit and component handling cost is $60 per unit. Under the old system, total cost includes base motor, components, and a combined support and overhead cost that is allocated as 35% of manufacturing expenses. The costs per unit are higher under the old system because support overhead is allocated differently between order processing and component handling costs under the new system.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    8 views1 page

    MAC Assignemet Seimens

    Uploaded by

    p23adityaprakash
    The document reports the costs per unit for 5 orders (A-E) under a new and old manufacturing system. Under the new system, the total cost per unit is broken down into base motor cost, component costs, order processing costs, and component handling costs. The order processing cost is a fixed $210.3 per unit and component handling cost is $60 per unit. Under the old system, total cost includes base motor, components, and a combined support and overhead cost that is allocated as 35% of manufacturing expenses. The costs per unit are higher under the old system because support overhead is allocated differently between order processing and component handling costs under the new system.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Q1 Reported cost for 5 orders under the new system per unit.

    Cost per Unit A B C D E


    Base Motor 304 304 304 304 304
    Components 39.6 79.2 118.8 198 396
    Order 210.3 210.3 210.3 210.3 210.3
    Processing
    Component 60 120 180 300 600
    Handling
    Total 613.9 713.5 813.1 1012.3 1510.3

    Order Processing Cost / Unit = 13800000/65625


    = 210.3

    Cost of Component Handling = 19500000/325000


    =60

    Q] Reported cost for 5 orders under the Old system per unit

    Cost per Unit A B C D E

    Base Motor 247 247 247 247 247


    Components 32.2 64.4 96.6 161 322
    Support 97.72 108.99 120.26 142.8 199.15
    Overhead

    Total 376.92 420.39 463.86 550.8 768.15

    Q3] Why are cost per unit different in both these systems?
    The traditional approach allocated the different support and administrative overhead charges
    35% of the manufacturing total expenses. However, under the new system, this support
    overhead was split between the two costs: the processing cost (which depends on the total
    number of orders) and the cost of components handling orders (which depends on the number
    of special components). Because of this, the cost per unit that resulted from using this process
    varied significantly.

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