Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 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 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. 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 245 batches 390 batches 635 batches Engineering costs $70,980 900 engineering 800 engineering hours 1700 engineering hrs Maintenance costs $70,750 2730 direct labor hours 1295 direct labor hours 4025 direct labor hours Total $2200 The overhead cost per blender using an activity-based 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 2200 units, while 1400 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 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. 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 245 batches 390 batches 635 batches Engineering costs $70,980 900 engineering 800 engineering hours 1700 engineering hrs Maintenance costs $70,750 2730 direct labor hours 1295 direct labor hours 4025 direct labor hours Total $2200 The overhead cost per blender using an activity-based costing system would be closest to (Round all answers to two decimal places.)
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 9PA: Carltons Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to...
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Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 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 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. 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 overhead cost per blender using an activity-based 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 | 245 batches | 390 batches | 635 batches |
| Engineering costs | $70,980 | 900 engineering | 800 engineering hours | 1700 engineering hrs |
| Maintenance costs | $70,750 | 2730 direct labor hours | 1295 direct labor hours | 4025 direct labor hours |
| Total | $2200 | | | |
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