2) 2) Lakeside Inc. manufactures four lines of remote control boats and uses act
ID: 2420564 • Letter: 2
Question
2)
2)
Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product cost.
Activity Cost Pool
Estimated
Total Cost
Estimated Cost Driver
Machining
$
332,000
13,400
machine hours
Setup
71,000
450
batches
Quality control
94,000
790
inspections
Suppose the Speedy boat requires 2,000 machine hours, 90 batches, and 320 inspections. Using the activity rates, determine the amount of overhead assigned to the Speedy product line. (Round intermediate calculations to 2 decimal places and your final answers to the nearest dollar amount.)
Cost Pool
Allocate Overhead
Machining
Setup Costs
QUALITY CONTROL
Total Overhead
Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product cost.
Explanation / Answer
Solution:
Overhead Allocation / Caluculation Formula:
Cost Pool
Allocate Overhead
Machining
($ 3,32,000 / 2,000) = 166
Setup Costs
($ 71,000 / 90) = 788.88
QUALITY CONTROL
($ 94,000 / 320) = 293.75
Total Overhead
= 1,248.63
Estimated Cost Drivers Allocation:
Machining = 13,400 / 2,000 = 6.7
Setup = 450 / 90 = 5
QUALITY CONTROL = 790 / 320 = 2.468
Overhead Allocation = Cost Pool / Activity Cost rate measureRelated Questions
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