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) $37,500 $15,600 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities Indirect labor 0.30 0.30 0.40 0.30 0.10 0.60 MHs Batches Product S8 3,100 7,600 1,500 1,100 Product F1 Total 10,700 2,600 Product S8 Product F1 $ 96,400 $ 35,600 $ 38,800 Sales (total) Direct materials (total) $75,700 $26,000 Direct labor (total) $33,700 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) $37,500 $15,600 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities Indirect labor 0.30 0.30 0.40 0.30 0.10 0.60 MHs Batches Product S8 3,100 7,600 1,500 1,100 Product F1 Total 10,700 2,600 Product S8 Product F1 $ 96,400 $ 35,600 $ 38,800 Sales (total) Direct materials (total) $75,700 $26,000 Direct labor (total) $33,700 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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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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)
$37,500
$15,600
Distribution of Resource Consumption Across Activity Cost Pools
Processing
Setting Up
Other
Factory utilities
0.30
0.30
0.40
Indirect labor
0.30
0.10
0.60
MHs
Batches
Product S8
3,100
1,500
Product F1
7,600
1,100
Total
10,700
2,600
Product S8
Product F1
Sales (total)
Direct materials (total)
Direct labor (total)
$75,700
$26,000
$ 96,400
$ 35,600
$ 38,800
$33,700
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.
Complete this question by entering your answers in the tabs below.
Transcribed Image Text:Direct labor (total)
$33,700
$ 38,800
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.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Required D
Assign overhead costs to activity cost pools using activity-based costing.
Activity Cost Pools
Processing
Setting Up
Other
Total
Factory utilities
Indirect labor
Total
< Required A
Required B >
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