
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Exercise 17-19 (Algo) Activity-based costing to compute activity rates, overhead cost per unit, and
product cost per unit LO P3
Northwest Company produces two types of glass shelving: rounded edge and squared edge. The company reports the following cost
data.
Direct materials
Direct labor
Overhead (using plantwide rate)
Total product cost
Units produced
Product cost per unit
Activity
Purchasing
Depreciation of machinery
Setup
Total
Northwest's controller wants to apply activity-based costing to allocate the $133,600 of overhead cost to the two products to see
whether product cost per unit would change markedly from that above. The company's budgeted activity usage equals its actual
activity usage for the period. The following additional information is collected.
Rounded Edge Squared Edge
$ 39,600
$ 51,600
34,400
87,400
$ 173,400
17,200
$ 10.08
13, 200
46, 200
Required 1 Required 2 Required 3
$ 99,000
13,200
$ 7.50
Activity
Budgeted Cost
$ 7,000
69,400
57,200
$ 133,600
Purchasing
Depreciation
Setup
Total
$ 91,200
47,600
133,600
$ 272,400
Required:
1. Compute the activity rate for each activity using activity-based costing.
2. Compute overhead cost per unit for each of the two products using activity-based costing.
3. Determine product cost per unit for each of the two products using activity-based costing.
Complete this question by entering your answers in the tabs below.
Activity Cost Driver
Purchase orders
Machine hours
Setups
Compute the activity rate for each activity using activity-based costing. (Round "Activity rate" to 2 decimal places.)
Budgeted Cost Budgeted Activity Usage
Activity Rate
machine hours
purchase orders
setups
Rounded Edge
189 orders
500 hours
40 setups
Required 2 >
Activity Usage
Squared Edge
511 orders
1,500 hours
210 setups
Total
700 orders
2,000 hours
250 setups
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