Molly's Dog Treats is considering the use of activity-based costing. The following information is provided for the production of two product lines: Activity Total Budgeted Cost Allocation Base Setup $76,600 Number of setups Machine maintenance $34,200 Number of machine hours Total $110,800 Information Regular Treats Special Treats Total Direct labor hours 5,300 7,000 12,300 Number of setups 220 1,920 2,140 Number of machine hours 980 3,020 4,000 Molly's Dog Treats expects to produce a total of 11,100 units of Regular Treats and 29,020 of Special Treats. Find the ABC indirect manufacturing cost per unit for each product. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the predetermined overhead allocation rate for each activity. Activity Total estimated overhead cost / Total estimated quantity of the overhead allocation base = Predetermined Overhead Allocation Rate Setup / = Machine maintenance / = 2. Compute the expected indirect manufacturing cost of each product. Regular Treats Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Setup X = Machine Machine maintenance X = Total Manufacturing Overhead Costs Number of products Manufacturing overhead cost per product Special Treats Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Setup X = Machine Machine maintenance X = Total Manufacturing Overhead Costs Number of products
Molly's Dog Treats is considering the use of activity-based costing. The following information is provided for the production of two product lines: Activity Total Budgeted Cost Allocation Base Setup $76,600 Number of setups Machine maintenance $34,200 Number of machine hours Total $110,800 Information Regular Treats Special Treats Total Direct labor hours 5,300 7,000 12,300 Number of setups 220 1,920 2,140 Number of machine hours 980 3,020 4,000 Molly's Dog Treats expects to produce a total of 11,100 units of Regular Treats and 29,020 of Special Treats. Find the ABC indirect manufacturing cost per unit for each product. (Round your answers to two decimal places when needed and use rounded answers for all future calculations). 1. Compute the predetermined overhead allocation rate for each activity. Activity Total estimated overhead cost / Total estimated quantity of the overhead allocation base = Predetermined Overhead Allocation Rate Setup / = Machine maintenance / = 2. Compute the expected indirect manufacturing cost of each product. Regular Treats Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Setup X = Machine Machine maintenance X = Total Manufacturing Overhead Costs Number of products Manufacturing overhead cost per product Special Treats Predetermined Overhead Allocation rate X Actual Quantity of the Allocation Base Used = Allocated Manufacturing Overhead Cost Setup X = Machine Machine maintenance X = Total Manufacturing Overhead Costs Number of products
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 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Molly's Dog Treats is considering the use of activity-based costing. The following information is provided for the production of two product lines:
manufacturing cost per unit for each product.
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the predetermined overhead allocation rate for each activity.
2. Compute the expected indirect manufacturing cost of each product.
| Activity | Total Budgeted Cost | Allocation Base |
|---|---|---|
| Setup | $76,600 | Number of setups |
| Machine maintenance | $34,200 | Number of machine hours |
| Total | $110,800 |
| Information | Regular Treats | Special Treats | Total |
|---|---|---|---|
| Direct labor hours | 5,300 | 7,000 | 12,300 |
| Number of setups | 220 | 1,920 | 2,140 |
| Number of machine hours | 980 | 3,020 | 4,000 |
Molly's Dog Treats expects to produce a total of 11,100 units of Regular Treats and 29,020 of Special Treats. Find the ABC indirect
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the predetermined overhead allocation rate for each activity.
| Activity | Total estimated overhead cost | / | Total estimated quantity of the overhead allocation base | = | Predetermined Overhead Allocation Rate |
|---|---|---|---|---|---|
| Setup | / | = | |||
| Machine maintenance | / | = |
2. Compute the expected indirect manufacturing cost of each product.
| Regular Treats | Predetermined Overhead Allocation rate | X | Actual Quantity of the Allocation Base Used | = | Allocated Manufacturing Overhead Cost |
|---|---|---|---|---|---|
| Setup | X | = | |||
| Machine Machine maintenance | X | = | |||
| Total Manufacturing Overhead Costs | |||||
| Number of products | |||||
| Manufacturing overhead cost per product |
| Special Treats | Predetermined Overhead Allocation rate | X | Actual Quantity of the Allocation Base Used | = | Allocated Manufacturing Overhead Cost |
|---|---|---|---|---|---|
| Setup | X | = | |||
| Machine Machine maintenance | X | = | |||
| Total Manufacturing Overhead Costs | |||||
| Number of products | |||||
| Manufacturing overhead cost per product |
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