Maroone, Inc The Following Are the Two Product Models Completed During the Drivers

question 35

Essay

Maroone, Inc., has identified the following overhead costs and activity drivers for next year:
$$\begin{array} { l c l c } \text { Overhead Item } & \text { Expected Cost } & \text { Activity Driver } & \text { Expected Qty. } \\\text { Setup costs } & \$ 150,000 & \text { Number of setups } & 1,200 \\\text { Ordering costs } & 40,000 & \text { Number of orders } & 10,000 \\\text { Maintenance } & 200,000 & \text { Machine hours } & 16,000 \\\text { Power } & 20,000 & \text { Kilowatt hours } & 100,000\end{array}$$
The following are the two product models completed during the year:
$$\begin{array} { l r r } & \text { Model SS } & \text { Model TT } \\\text { Direct materials } & \$ 2,250 & \$ 2,500 \\\text { Direct labor } & 3,000 & 1,875 \\\text { Units completed } & 375 & 300 \\\text { Direct labor hours } & 90 & 110 \\\text { Number of setups } & 6 & 8 \\\text { Number of orders } & 8 & 15 \\\text { Machine hours } & 180 & 150 \\\text { Kilowatt hours } & 90 & 120\end{array}$$
The company's normal activity is 20,000 direct labor hours.
Required:
a.Determine the unit cost for each job using direct labor hours to apply overhead.
b.Determine the unit cost for each job using the four activity drivers. (Round amounts to 2 decimal places.)
c.Which method produces the more accurate cost assignment? Why?

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Definitions:

Unequal Access

The disparity in the ability to obtain resources or opportunities between different groups of people.

Medical Care

Refers to the services provided by health professionals to diagnose, treat, and prevent illness, injury, and other physical and mental impairments in people.

Sick Role

A concept in medical sociology that describes the patterns of behavior that a sick person adopts to minimize the disruptive impact of their illness on others.

Theoretical Perspective

An established principle or set of principles proposed to explain phenomena, guiding the collection and analysis of related facts.