Assume that a company makes only three products: Product A. Product B. and Product C. Currently, the company uses a conventional cost system that relies on plantwide overhead cost allocation based on direct labor-hours. It is considering replacing its conventional cost system with an activity-based costing (ABC system. The ABC system would include a total of four activities: Assembly (allocated to products based on direct labor-hours), Machine Setups (allocated to products based on number of setups), Material Handling (allocated to products based on the number of material moves), and Product Design (allocated to products based on the number of products). Product C 2,eee units 2 hours 20 setups Product A Product B 7,000 units Number of units produced Direct labor hours per unit Number of setups Number of material moves 1,eee units 2 hours se setups 2 hours 30 setups 6e0 moves 4ee moves 200 moves Number of products 1 product 1 product 1 product Using the plantwide approach, what percent of the company's total overhead cost would be allocated to Product A? Multiple Choice 33% 10% 25% 15% O O O O

Assume that a company makes only three products: Product A. Product B. and Product C. Currently, the company uses a conventional cost system that relies on plantwide overhead cost allocation based on direct labor-hours. It is considering replacing its conventional cost system with an activity-based costing (ABC system. The ABC system would include a total of four activities: Assembly (allocated to products based on direct labor-hours), Machine Setups (allocated to products based on number of setups), Material Handling (allocated to products based on the number of material moves), and Product Design (allocated to products based on the number of products). Product C 2,eee units 2 hours 20 setups Product A Product B 7,000 units Number of units produced Direct labor hours per unit Number of setups Number of material moves 1,eee units 2 hours se setups 2 hours 30 setups 6e0 moves 4ee moves 200 moves Number of products 1 product 1 product 1 product Using the plantwide approach, what percent of the company's total overhead cost would be allocated to Product A? Multiple Choice 33% 10% 25% 15% O O O O

Name: Assume that a company makes only three products: Product A, Product B
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Description: Assume that a company makes only three products: Product A, Product B. and Product C. Currently, the company uses a conventional cost system that relies on plantwide overhead cost allocation based on direct labor-hours. It isconsidering replacing it

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3PB: Activity-based department rate product costing and product cost distortions Big Sound Inc....

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