6) (3 points) Because the company has become much more automated in recent perio

Question

6) (3 points) Because the company has become much more automated in recent periods, Superior is considering adopting an Activity Based Costing System to replace its traditional costing system Company would like to compare operating results under the two methods, traditional and ABC. Superior Company has identified the following cost activities: Support, Batch setups, Product sustaining, Inspection and General Factory. Eighteen percent of the overhead costs can be attributable to Support, TO% to Batch Setups, 22 to Product sustaining, 8 for i to General Factory. Superior Company has identified the drivers for each of these costs pools and accumulated statistics for each as they have related to the recent period Use the table below to complete each requirement. a) Use the percentage provided in the description (underlined) to allocate the total applied overhead from JE in ld) to each cost b) Use the driver units to calculate an activity rate for each pool by dividing "Allocated costs by 332 c "units". Show 2 decimals for calculated rates. Allocated costs Calculated Rate Driver units Driver a 760 3,000 Receipts 155 #ofset ups Batch Setups Product Sustaining 70 #of materials 1,200 units 14,.000 machine hours General Factory Total OH (JE 1d) 7) (4 points) In an Activity Based Costing System, overhead is allocated to each job from each cost pool. Complete Driver units' statistics are accumulated for each job and they are listed in the table below. the table below for the following requirements. a) Use the activity units for cach job included in the table and the rates calculated in 6b) above to calculate the overhead allocated for each activity b) For each job, determine the total overhead applied by adding the costs allocated from each pool. (Support, Batch Setups, Product Sustaining and General Factory). BY92 ZF14 units Costs units units 420 200 3a 1,500 40 Support Batch Setups Product Sustaining 23 20 80 60 880 220 4,200 General Factory Total Overhead Applied 69

Explanation / Answer

Answer:

  

Superior Company Job Report-ABC Costing JV 28 BY 92 ZF 14 SALES REVENUE 8a 438800 131640 241340 JOB COST: APPILIED OVERHEAD 8c 143866 33611 62673 DIRECT MATERIAL 8b 113200 33960 62260 DIRECT LABOUR 8b 24500 12600 14000 TOTAL JOB COSTS 8d 281566 80171 138933 GROSS MARGIN 8e 157234 51469 102407 GROSS MARGIN % 8f 35.83 39.10 42.43 Calculation of OH Cost Under ABC Costing JV28 BY92 ZF14 Total OH Cost % Allocated Driver Cpu Units Cost Units Cost Units Cost 332000 18 59760 3000 19.92 1500 29880 200 3984 420 8366 332000 10 33200 155 214.19 40 8568 23 4926 11 2356 332000 22 73040 70 1043.43 20 20869 14 14608 8 8347 332000 8 26560 1200 22.13 220 4869 60 1328 80 1771 332000 42 139440 14000 9.96 8000 79680 880 8765 4200 41832 100 332000 18425 143866 33611 62673 Which job Should Management be most concenrned about costs? Why 9a JV 28 Cost of this job is too High and OH cost High Which job Should Management want to produce and sell more of? Why 9b BY 92 Margin is too High and OH Cost Low

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.