Adams Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Cost Cost driver Unit Level $ 78,300 Activities Batch Level $ 23,520 2,700 labor hours 49 setups Product Level $ 17,000 Percentage of use Facility Level $247,000 13,000 units Production of 880 sets of cutting shears, one of the company's 20 products, took 170 labor hours and 8 setups and consumed 15 percent of the product-sustaining activities. Required a. Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 880 units are produced. If direct product costs are $140 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system?

Adams Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Cost Cost driver Unit Level $ 78,300 Activities Batch Level $ 23,520 2,700 labor hours 49 setups Product Level $ 17,000 Percentage of use Facility Level $247,000 13,000 units Production of 880 sets of cutting shears, one of the company's 20 products, took 170 labor hours and 8 setups and consumed 15 percent of the product-sustaining activities. Required a. Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 880 units are produced. If direct product costs are $140 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system?

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Description: i need the answer quickly Adams Company produces commercial gardening equipment. Since production is highly automated, the company allocates itsoverhead costs to product lines using activity-based costing. The costs and cost drivers associated with t

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 7E: The management of Nova Industries Inc. manufactures gasoline and diesel engines through two...

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