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(solution) 1. Swariski Jewelry Corporation manufactures custom jewelry. In


Can you please help my economic assignment attached below, with step by step how to do it?

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1. Swariski Jewelry Corporation manufactures custom jewelry. In the past, Swariski has

 

been using a traditional overhead allocation system based solely on direct labor hours.

 

Sensing that this system was distorting costs and selling prices, Swariski has decided to

 

switch to an activity-based costing system using three activity cost pools. Information on

 

these activity cost pools are as follows: Activity Cost Pool

 

Labor related............

 

Machine related.......

 

Quality control......... Estimated Activity

 

8,000

 

direct labor hours

 

12,500 machine hours

 

800

 

number of inspections Estimated Overhead Cost

 

$40,000

 

$50,000

 

$12,000 Job #309 incurred $900 of direct material, 30 hours of direct labor at $40 per hour, 80

 

machine hours, and 5 inspections.

 

Required:

 

a. What is the cost of the job under the activity-based costing system?

 

b. Relative to the activity-based costing system, would Job #309 have been overcosted

 

or undercosted under the traditional system and by how much? 2. XYZ Company has identified the following overhead activities, costs, and activity drivers for the

 

coming year:

 

Activity Expected Cost Material-handling costs..........

 

Machine costs........................

 

Order costs.............................

 

Receiving costs......................

 

Setup costs............................ $45,000

 

80,000

 

15,000

 

30,000

 

50,000 Activity Driver Activity Capacity Number of moves.................

 

Machine hours.....................

 

Number of orders.................

 

Number of parts...................

 

Number of setups................. 450

 

20,000

 

750

 

50,000

 

250 Assume that each activity corresponds to a process. XYZ?s normal activity is 5,000 direct labor hours.

 

The following two jobs were completed during March: Job X-1 Direct materials......................................

 

Direct labor ($15 per hour).....................

 

Units completed.....................................

 

Number of moves...................................

 

Machine hours.......................................

 

Number of orders...................................

 

Number of parts.....................................

 

Number of setups................................... Job Y-4 $1,500

 

$750

 

200

 

3

 

125

 

3

 

200

 

1 $2,000

 

$750

 

200

 

6

 

75

 

12

 

800

 

4 Required:

 

1. Determine the unit cost for each job using direct labor hours to apply overhead (tradisional

 

method)

 

2. Determine the unit cost for each job using ABC method

 

3. Which method is more accurate?give explaination 3.

 


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