Advent Corporation has implemented an Activity Based Costing System. The company wants to use ABC on its two main products, V1 and V2, and three main activities as follows: ActivityCost Driver Overhead Amount Total Driver Volume Issuing Purchase Orders # of Purchase Orders $ 150,000 50,000 Reviewing Receiving Reports # of Receiving Reports $ 175,000 20,000 Making Phone Calls # of Phone Calls $ 450,000 100,000 During the year: Product V1 required 150 purchase orders; 150 receiving reports; and 200 phone calls. Product V2 required100 purchase orders; 400 receiving reports; and 350 phone calls. Required: a. Compute the pre-determined overhead rate for each cost pool. b. Compute the total manufacturing overhead cost for Product V1 and Product V2.
Advent Corporation has implemented an Activity Based Costing System. The company wants to use ABC on its two main products, V1 and V2, and three main activities as follows: ActivityCost Driver Overhead Amount Total Driver Volume Issuing Purchase Orders # of Purchase Orders $ 150,000 50,000 Reviewing Receiving Reports # of Receiving Reports $ 175,000 20,000 Making Phone Calls # of Phone Calls $ 450,000 100,000 During the year: Product V1 required 150 purchase orders; 150 receiving reports; and 200 phone calls. Product V2 required100 purchase orders; 400 receiving reports; and 350 phone calls. Required: a. Compute the pre-determined overhead rate for each cost pool. b. Compute the total manufacturing overhead cost for Product V1 and Product V2.
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter26: Cost Allocation And Activity-Based Costing
Section: Chapter Questions
Problem 26.8EX: Identifying activity bases in an activity-based cost system Select Foods Inc. uses activity-based...
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Question 3 Part I
Advent Corporation has implemented an Activity Based Costing System. The company wants to use
ABC on its two main products, V1 and V2, and three main activities as follows:
ActivityCost Driver Overhead Amount Total Driver Volume
Issuing Purchase Orders # of Purchase Orders $ 150,000 50,000
Reviewing Receiving Reports # of Receiving Reports $ 175,000 20,000
Making Phone Calls # of Phone Calls $ 450,000 100,000
During the year:
Product V1 required 150 purchase orders; 150 receiving reports; and 200 phone calls.
Product V2 required100 purchase orders; 400 receiving reports; and 350 phone calls.
Required:
a. Compute the pre-determined overhead rate for each cost pool.
b. Compute the total
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