Santana Is a Staff Accountant for Tapestry, a Factory That

Essay

Santana is a staff accountant for Tapestry, a factory that manufactures decorative wall hangings. Tapestry is gearing up to have their busiest year yet, and they anticipate the production of 147,800 units. Santana has been analyzing some cost data and is going to recommend to management that they switch from a traditional costing system to an Activity-Based Costing (ABC) system. Santana believes that management will benefit overall from having the costing allocated by activity rather than a single cost driver. Tapestry has the following budgeted costs: Direct Materials (DM), $283,706.00; and Direct Labor (DL), $186,540.00. Their budgeted Manufacturing Overhead (MOH) costs are comprised of the following:
Materials Sorting: $88,700 (10,000 yards of fabric)
Setups: $56,400 (7,600 setups)
Supervisor Wages: $103,540 (8,430 hours)
The actual usage of resources this year includes 9,680 yards of fabric, 7,400 setups, and 8,133 supervisor hours.
(If required, round calculations to two decimal places.)
a. How much MOH is allocated for the year based upon the ABC rates?
b. How much is the total product cost for the wall hanging units produced this year?
c. What is the total cost per unit for each wall hanging?