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on 2: Allocating costs using ABC ve an ABC system with three pools 123 total cost in the pool $80,000 $60,000 $40,000 product A 4,000 DL$ 20 setups 50 hours number of cost driver units product B 6,000 DL$ 30 setups 150 hours total 10,000 DL 50 setups 200 hour:

on 2: Allocating costs using ABC ve an ABC system with three pools 123 total cost in the pool $80,000 $60,000 $40,000 product A 4,000 DL$ 20 setups 50 hours number of cost driver units product B 6,000 DL$ 30 setups 150 hours total 10,000 DL 50 setups 200 hour:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Allocating Costs Using ABC This example demonstrates an Activity-Based Costing (ABC) system with three cost pools. Below is a breakdown of costs and calculations for products A and B. #### Table 1: Cost Pool Details | Cost Pool | Total Cost in the Pool | Number of Cost Driver Units | |-----------|------------------------|-----------------------------| | **Pool 1** | $80,000 | 4,000 DL$ for Product A, 6,000 DL$ for Product B (Total: 10,000 DL$) | | **Pool 2** | $60,000 | 20 setups for Product A, 30 setups for Product B (Total: 50 setups) | | **Pool 3** | $40,000 | 50 hours for Product A, 150 hours for Product B (Total: 200 hours) | **DL$** stands for Direct Labor Dollars. #### Table 2: Activity Rates and Allocated Costs The task is to compute the activity rates and allocated costs for Products A and B. | Cost Pool | Activity Rate | Allocated Costs for Product A | Allocated Costs for Product B | |-----------|---------------|------------------------------|------------------------------| | **Pool 1** | $ ___ per DL$ | $ ___ | $ ___ | | **Pool 2** | $ ___ per setup | $ ___ | $ ___ | | **Pool 3** | $ ___ per hour | $ ___ | $ ___ | #### Total Allocated Costs for Each Product - Total Allocated Cost for Product A: $ ___ - Total Allocated Cost for Product B: $ ___ ### Explanation of the Diagram The diagram consists of two tables. The first table lists total costs in three distinct pools along with the number of cost driver units broken down by product. The second table is intended for computing and inputting the respective activity rates and allocated costs based on cost driver units such as direct labor dollars, setups, and hours.
Transcribed Image Text:### Allocating Costs Using ABC This example demonstrates an Activity-Based Costing (ABC) system with three cost pools. Below is a breakdown of costs and calculations for products A and B. #### Table 1: Cost Pool Details | Cost Pool | Total Cost in the Pool | Number of Cost Driver Units | |-----------|------------------------|-----------------------------| | **Pool 1** | $80,000 | 4,000 DL$ for Product A, 6,000 DL$ for Product B (Total: 10,000 DL$) | | **Pool 2** | $60,000 | 20 setups for Product A, 30 setups for Product B (Total: 50 setups) | | **Pool 3** | $40,000 | 50 hours for Product A, 150 hours for Product B (Total: 200 hours) | **DL$** stands for Direct Labor Dollars. #### Table 2: Activity Rates and Allocated Costs The task is to compute the activity rates and allocated costs for Products A and B. | Cost Pool | Activity Rate | Allocated Costs for Product A | Allocated Costs for Product B | |-----------|---------------|------------------------------|------------------------------| | **Pool 1** | $ ___ per DL$ | $ ___ | $ ___ | | **Pool 2** | $ ___ per setup | $ ___ | $ ___ | | **Pool 3** | $ ___ per hour | $ ___ | $ ___ | #### Total Allocated Costs for Each Product - Total Allocated Cost for Product A: $ ___ - Total Allocated Cost for Product B: $ ___ ### Explanation of the Diagram The diagram consists of two tables. The first table lists total costs in three distinct pools along with the number of cost driver units broken down by product. The second table is intended for computing and inputting the respective activity rates and allocated costs based on cost driver units such as direct labor dollars, setups, and hours.
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