Accounting Question
Consider the following information for Hamburg Corporation:ItemsUnitsBeginning inventory85,000Units started during the year155,000Ending inventory61,000
Inventory is 100% complete as to materials and 60% complete as to conversion.ItemsMaterialsConversionBeginning costs (SAR)425,000686,000Costs added during the period (SAR)1,255,000980,000
Using the WEIGHTED AVERAGE method:Calculate the number of units completed during the period.Calculate equivalent units for conversion during the period.Calculate cost per equivalent units for materials.Mannheim Corporation manufactures small camping tents and family camping tents. The estimated direct labor time to produce each type of tent is as follows:ItemsSmallFamilyEstimated tents produced24,50011,000Direct labor hours per tent2.54.5
Estimated overhead for the period = 1,300,000 SAR.Compute the overhead cost assigned to each type of tent assuming direct labor hours are used to allocate overhead costs.The controller is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the family tent product line because of its complexity. He, therefore, developed the following three activity cost pools and related cost drivers to better understand the costs.Activity Cost PoolsExpected Use of Cost DriversEstimated Overhead Costs (SAR)Setting up machines1,000 setups25,000Assembling90,000 labor hours980,000Inspection1,200 inspections230,000
Calculate the activity-based overhead rates for these three cost pools.Compute the cost that is assigned to each tent using activity-based costing system, given the following information.Expected Use of Cost Drivers per ProductItemsSmallFamilyNumber of setups130825Direct labor hours29,00055,000Number of inspections1251,125
What do you believe the controller should do and why?You must show your work for credit.

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