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P24-24A The Niehbur Manufacturing Company in Hondo, Texas, assembles and tests electronic components used in handheld video phones

P24-24A The Niehbur Manufacturing Company in Hondo, Texas, assembles and tests electronic components used in handheld video phones
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Solution Guide / Answer Key:

ACCOUNTING
Accounting 7th Edition by Horngren, Harrison and Bamber
P24-24A
The Niehbur Manufacturing Company in Hondo, Texas, assembles and tests electronic components used in handheld video phones. Consider the following data regarding component T24:

The activities required to build the component follow.

Activity Allocation Base Cost Allocated to Each Unit
Start station Number of raw component chassis 2 × $ 1.30 = $ 2.60
Dip insertion Number of dip insertions ? × $ 0.40 = 12.00
Manual insertion Number of manual insertions 12 × $ 0.80 = ?
Wave solder Number of components soldered 1 × $ 1.60 = 1.60
Backload Number of backload insertions 7 × $ ? = 4.20
Test Testing hours 0.40 × $80.00 = ?
Defect analysis Defect analysis hours 0.10 × $ ? = 5.00
Total $?

Requirements
1. Fill in the blanks in both the opening schedule and the list of activities. (p. 1209)
2. How is labor cost assigned to products under this ABC product costing system?
3. Why might managers favor this ABC system instead of Niehbur’s older system, which allocated all conversion costs on the basis of direct labor? (pp. 1209–1210)

 

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