Leader Corporation manufactures two products: Product Alfa and Product Beta. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Alfa and Beta. Activity Cost Pool Activity Measure Machine-hours Total Cost Total Activity $144,000 9,000 MHs Number of setups $100,000 Number of products $52,000 Direct labor-hours $280,000 Machining Machine setups Product design General factory Activity Measure Product Alfa Product Beta Machine-hours 5,000 4,000 100 150 1 1 3,000 7,000 Number of setups Number of products Direct labor-hours 250 setups 2 products 10,000 DLHS Required: a. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product Alfa? b. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product Beta? c. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Alfa? d. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Beta?
Leader Corporation manufactures two products: Product Alfa and Product Beta. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Alfa and Beta. Activity Cost Pool Activity Measure Machine-hours Total Cost Total Activity $144,000 9,000 MHs Number of setups $100,000 Number of products $52,000 Direct labor-hours $280,000 Machining Machine setups Product design General factory Activity Measure Product Alfa Product Beta Machine-hours 5,000 4,000 100 150 1 1 3,000 7,000 Number of setups Number of products Direct labor-hours 250 setups 2 products 10,000 DLHS Required: a. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product Alfa? b. Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product Beta? c. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Alfa? d. Using the ABC system, how much total manufacturing overhead cost would be assigned to Product Beta?
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 13EB: Stacks manufactures two different levels of hockey sticks: the Standard and the Slap Shot. The total...
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