Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below: Factory utilities (total) Indirect labor (total) Distribution of Resource Consumption Across Activity Cost Pools Factory utilities Indirect labor Product S8 Product F1 Total $ 33,100 $ 11,700 Sales (total) Direct materials (total) Direct labor (total) Processing 0.30 0.30 MHS 3,000 7,100 10,100 Setting Up 0.30 0.10 Batches 1,000 500 1,500 Product S8 $ 65,800 $ 21,700 $ 27,300 Other 0.40 0.60 Product F1 $ 98,600 $ 34,700 $ 41,200 Required: a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d. Determine the product margins for each product using activity-based costing.
Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below: Factory utilities (total) Indirect labor (total) Distribution of Resource Consumption Across Activity Cost Pools Factory utilities Indirect labor Product S8 Product F1 Total $ 33,100 $ 11,700 Sales (total) Direct materials (total) Direct labor (total) Processing 0.30 0.30 MHS 3,000 7,100 10,100 Setting Up 0.30 0.10 Batches 1,000 500 1,500 Product S8 $ 65,800 $ 21,700 $ 27,300 Other 0.40 0.60 Product F1 $ 98,600 $ 34,700 $ 41,200 Required: a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d. Determine the product margins for each product using activity-based costing.
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 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...
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