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Please complete the following questions using Microsoft Excel Spreadsheet including the formulas.

Consider the following information for Hamburg Corporation:

Units

Beginning inventory 80,000

Units started during the year 150,000

Ending inventory 62,000

Inventory is 100% complete to materials and 60% complete to conversion.

Materials Conversion

Beginning costs (SAR) 420,000 687,000

Costs added during the period (SAR) 1,250,000 983,000

Using the WEIGHTED AVERAGE method:

1. Calculate the number of units completed during the period.
2. Calculate equivalent units for conversion during the period.
3. Calculate cost per equivalent unit 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:

Small Family

Estimated tents produced 25,000 10,000

Direct labor hours per tent 2 5

Estimated overhead for the period = 1,200,000 SAR.

1. 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 Pools Expected Use of Cost Drivers Estimated Overhead Costs (SAR)

Setting up machines 1,000 setups 220,000

Assembling 90,000 labor hours 990,000

Inspection 1,200 inspections 240,000

1. Calculate the activity-based overhead rates for these three cost pools.
2. Compute the cost that is assigned to each bicycle product line using an activity-based costing system, given the following information.

Expected Use of Cost Drivers per Product

Small Family

Number of setups 150 850

Direct labor hours 30,000 60,000

Number of inspections 100 1,100

1. What do you believe the controller should do ?

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