6) Using activity-based costingmethod, how much is the cost driverrates for shipping?7) Using activity-based costingmethod, how much is the overheadallocated to M3100?8) Using activity-based costingmethod, how much is the overheadallocated to M6100?9) Using activity-based costingmethod, how much is the grossprofit? MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocatedoverhead to products using machine-hours. Last year, the company produced 10,000 units ofM3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenuesand costs:MTIIncome StatementM3100M4 100M6100TotalSales revenue.Direct costsDirect materials ..Direct labor$9,000,000 $15,000,000 $13,500,000 $37,500,0003,000,000600,0004,500,000900,0003,300,000 10,800,0001,800,000 3,300,000Variable overheadSetting up machines.Processing sales orders...Warehousing .....Operating machinesShipping ..Contribution margin.Plant administration2,400,0001,800,0002,400,0001,200,000900,000$14,700,000Gross profit.....6,000,000$ 8,700,000MTI's controller has heard about activity-based costing and puts together an employee teamto recommend cost allocation bases. The employee team recommends the following:ActivityCost DriverM3100 M4100 M6100Setting up machines.... Production runsProcessing sales ordersWarehousing...Operating machinesShipping..102020Sales orders receivedUnits held in inventoryMachine-hours1804002201002001006,00010,000 17,500 10,0009,000 10,000Units shippedThe employee team recommends that plant administration costs not be allocated to products.

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Description: 6) Using activity-based costingmethod, how much is the cost driverrates for shipping?7) Using activity-based costingmethod, how much is the overheadallocated to M3100?8) Using activity-based costingmethod, how much is the overheadallocated to M6100?

ABC costing is allocating the overhead cost based on the activity used in manufacturing products. It…

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6) Using activity-based costing method, how much is the cost driver rates for shipping? 7) Using activity-based costing method, how much is the overhead allocated to M3100? 8) Using activity-based costing method, how much is the overhead allocated to M6100? 9) Using activity-based costing method, how much is the gross profit?

6) Using activity-based costing method, how much is the cost driver rates for shipping? 7) Using activity-based costing method, how much is the overhead allocated to M3100? 8) Using activity-based costing method, how much is the overhead allocated to M6100? 9) Using activity-based costing method, how much is the gross profit?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12EB: Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes...

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