Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units, while 1500 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require .75 direct labor hours per unit. The total estimated overhead for the period is $149,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimated overhead cost Toasters Blenders Total Setup costs $8285 225 batches 400 batches 625 batches Engineering costs $70,980 810 engineering 840 engineering hours 1650 engineering hrs Maintenance costs $69,750 2720 direct labor hours 1195 direct labor hours 3915 direct labor hours Total $2100 The predetermined overhead allocation rate using the traditional costing system would be closest to (Round all answers to two decimal places.)
Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units, while 1500 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require .75 direct labor hours per unit. The total estimated overhead for the period is $149,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimated overhead cost Toasters Blenders Total Setup costs $8285 225 batches 400 batches 625 batches Engineering costs $70,980 810 engineering 840 engineering hours 1650 engineering hrs Maintenance costs $69,750 2720 direct labor hours 1195 direct labor hours 3915 direct labor hours Total $2100 The predetermined overhead allocation rate using the traditional costing system would be closest to (Round all answers to two decimal places.)
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 9PB: Caseys Kitchens makes two types of food smokers: Gas and Electric. The company expects to...
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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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Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units, while 1500 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require .75 direct labor hours per unit. The total estimated overhead for the period is $149,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools:
The predetermined overhead allocation rate using the traditional costing system would be closest to
(Round all answers to two decimal places.)
| | | Expected activity |
| Activity cost pool | Estimated overhead cost |
Toasters | Blenders | Total |
| Setup costs | $8285 | 225 batches | 400 batches | 625 batches |
| Engineering costs | $70,980 | 810 engineering | 840 engineering hours | 1650 engineering hrs |
| Maintenance costs | $69,750 | 2720 direct labor hours | 1195 direct labor hours | 3915 direct labor hours |
| Total | $2100 | | | |
(Round all answers to two decimal places.)
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