An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)
An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 39P: Randy Harris, controller, has been given the charge to implement an advanced cost management system....
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3 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.)
Transcribed Image Text:3
2. An Intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea.
and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities
follow:
5
wirts
00:40:40
Activity Cost Pool and
Activity Measure
Purchase orders (number of orders)
Rework requests (number of requests)
Product testing (number of tests)
Machine related (eachine-hours)
Activity Cost Pool
Purchase orders
Rework requests
Product testing
Machine related
Activity Rate
Estimated
Overhead
Cost
per order
per request
per test
per MH
$ 170,000
374,400
350,000
1,150,000
$2,044,400
Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools.
Deluxe
1,000
600
5,000
18,000
Activity
Regular
1,500
1,200
12,500
28.000
Total
2,500
1,000
17,500
46,000
3. Assume that actual activity is as expected for the year Using activity based costing, do the following:
6. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations
and round your final answers to nearest whole dollar amount.)
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