FUND.ACCT.PRIN.
25th Edition
ISBN: 9781260247985
Author: Wild
Publisher: RENT MCG
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Question
Chapter C, Problem 8E
To determine
Concept Introduction:
Activity-based costing: Activity-based costing is one of the cost allocation methods where
The overhead cost per unit.
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Students have asked these similar questions
Saddle Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on
direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were
used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's
operations.
Direct labor costs
Machine hours
Setup hours
Standard
$50,000
1,200
120
Custom
$100,000
1,500
360
Total estimated overhead costs are $294,600. Overhead cost allocated to the machining activity cost pool is $189,000, and
$105,600 is allocated to the machine setup activity cost pool.
Activity-Based Costing
CardioTrainer Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly
production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their
associated activity rates are as follows:
Activity
Activity Rate
Fabrication
$22 per machine hour (mh)
Assembly
$12 per direct labor hour (dlh)
Setup
$40 per setup
Inspecting
$18 per inspection
Production scheduling
$8 per production order
Purchasing
$5 per purchase order
The activity-base usage quantities and units produced for each product were as follows:
Stationary Bicycle
Treadmill
Machine hours
1,680
1,070
Direct labor hours
243
131
Setups
45
20
Inspections
158
94
Production orders
60
32
Purchase orders
240
98
Units produced
500
350
How do I solve the chart?
Chapter C Solutions
FUND.ACCT.PRIN.
Ch. C - Prob. 1QSCh. C - Computing plantwide overhead rates P1 Chan Company...Ch. C - Computing overhead rates under ABC P2 Refer to the...Ch. C - Prob. 4QSCh. C - Prob. 5QSCh. C - Prob. 6QSCh. C - Prob. 7QSCh. C - Prob. 8QSCh. C - Prob. 9QSCh. C - Prob. 10QS
Ch. C - Prob. 11QSCh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Exercise C-6 Activity-based costing P2 Northwest...Ch. C - Prob. 8ECh. C - Prob. 9ECh. C - Prob. 10ECh. C - Prob. 11ECh. C - Prob. 12ECh. C - Problem C-1A Applying activity-based costing P1 P2...Ch. C - Prob. 2PSACh. C - Prob. 3PSACh. C - Prob. 4PSACh. C - Prob. CSPCh. C - Prob. 1DQCh. C - Complete the following for a traditional two-stage...Ch. C - What is the difference between operating...Ch. C - What is activity-based costing? What is its goal?Ch. C - What is a cost object?
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Similar questions
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- Hansabenarrow_forwardA company manufactures two product types: Product A and Product B. The company uses an activity-based costing (ABC) system that allocates all of its overhead to three cost pools. The activity rates for the three cost pools are in the table below: Activity Cost rate $20/MH Activity Cost Pool Machining Factory Setups Product Design type The following Table is information for Product A: Product Type Machine Hours Number of setups Number of units Direct Labor Hours $100/setup $6,000 per product Direct Material Costs Direct Labor Costs Overhead Costs: Machining Factory Setups Product Design Total Product Costs Product A 3,000 MHs 230 setups Direct Material Cost Labor wage rate $25/DLH Calculate the total product cost assigned to Product A if Activity Based Costing is used. Use the Table below as guide: Product A Total Product Costs ($) ? 10,000 units 7,000 DLH $8.00/unit ? ? ? ? ?arrow_forwardRamsey SARL uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs - Security expense and Building depreciation - are allocated to three activity cost pools - Shipping, Carving, and Other - based on resource consumption. Data to perform these allocations appear below: Overhead Costs: Security expense: $105,000 Building depreciation: $70,000 Distribution of Resource Consumption across Activity Cost Pools: Overhead Cost Activity Cost Pools Shipping Carving Other Security expense 0.30 0.42 0.28 Building depreciation 0.34 0.32 0.34 The second stage of allocation is done by assigning the Shipping costs to products on the basis of orders shipped while products are assigned Carving costs based on machine hours. Costs assigned to the Other activity pool are not further assigned to products. Activity information for Ramsey's only two products is below: orders shipped machine hours Product BA-15: 6,300 1,500…arrow_forward
- Can someone help me with the second part?arrow_forwardUsing the information calculate the following,1. The manufacturing costs per unit and the total manufacturing costs, if all the overhead costs are absorbed on a machine hour basis.2. The overheads costs per unit using the ABC systemarrow_forwardChrzan, Incorporated, manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Product E0 Product Ne Total direct labor-hours Activity Cost Pools Labor-related Production orders Order size The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Overhead Cost Multiple Choice $33.94 per MH $54.20 per MH Direct Expected Labor-Hours Production Per Unit 10.1 410 1,550 9.1 $51.98 per MH $21.40 per MH Activity Measures DLHS orders MHs Total Direct Labor- Hours $ 301,890 61,087 585,366 $948,343 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: 4,141 14, 105 18,246 Product E 4,141 850 5,550 Expected Activity Product NO 14, 105 950 5,250 Total 18,246 1,800 10,800arrow_forward
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