Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity. To calculate: The Cost assigned to Acrylic line using the ABC system

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Chapter 4, Problem 1.4GBP

To determine

Concept introduction:

Activity Based Costing (ABC):

ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To calculate:

The Cost assigned to Acrylic line using the ABC system

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Allocating selling and administrative expenses using activity - based costing Artic Air Inc. manufactures cooling units for commercial buildings.The price and cost of goods sold for each units are as follows: In addition, the company incurs selling and administrative expenses of $226,250. The company wishes to assign these costs to its three major customers,Gough Industries,Breen Inc., and The Martin Group.These expenses are related to three major nonmanufacturing activities:customer services,project bidding,and engineering support.The engineering support is in the form of engineering changes thet are placed by the customer to change the design of a product.The budgeted activity costs and activity bases associated with these activities are: instructions 1.Determine the activity rates for each of the three nonmanufacturing activity pools. 2.Determine the activity costs allocated to the three customers,using the activity rates in (1) 3.Construct customer profitability reports for tile…