Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product 8. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Activity Measure Machine-hours Number of setups Number of products The company's plantwide overhead rate is closest to: Product A Product B 9,000 6,000 50 150 1 1 Estimated Overhead Cost $ 300,000 $ 150,000 $ 80,000 Expected Activity 15,000 MH 200 Setups 2 Products
Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product 8. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Activity Measure Machine-hours Number of setups Number of products The company's plantwide overhead rate is closest to: Product A Product B 9,000 6,000 50 150 1 1 Estimated Overhead Cost $ 300,000 $ 150,000 $ 80,000 Expected Activity 15,000 MH 200 Setups 2 Products
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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![Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product 8. The selling prices are $65 per unit for
Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct
materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is
considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following
additional information is available for the company as a whole and for Products A and B
Activity Cost Pool
Machining
Machine setups
Product design
Activity Measure
Machine-hours
Number of setups
Number of products
Activity Measure
Machine-hours
Number of setups
Number of products
The company's plantwide overhead rate is closest to:
Product A
9,000
50
Product B
6,000
150
1
1
Estimated
Overhead
Cost
$ 300,000
$ 150,000
$ 80,000
Expected Activity
15,000 MH
200 Setups
2 Products](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1435a94e-9789-45dd-809c-eabe058f0d5d%2F6aadec65-95c5-4876-830c-9ebe51debcd0%2Fqf7p5rr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product 8. The selling prices are $65 per unit for
Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct
materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is
considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following
additional information is available for the company as a whole and for Products A and B
Activity Cost Pool
Machining
Machine setups
Product design
Activity Measure
Machine-hours
Number of setups
Number of products
Activity Measure
Machine-hours
Number of setups
Number of products
The company's plantwide overhead rate is closest to:
Product A
9,000
50
Product B
6,000
150
1
1
Estimated
Overhead
Cost
$ 300,000
$ 150,000
$ 80,000
Expected Activity
15,000 MH
200 Setups
2 Products
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