Sunshine Co Ltd produces two types of window frame, aluminum and wooden. The com

Question

Sunshine Co Ltd produces two types of window frame, aluminum and wooden. The company's simple costing system has two direct cost categories (materials and labour) and one indirect cost pool. The simple costing system allocates indirect costs on the basis of mac lane hours. Recently, the owners of Sunshine have been concerned about a decline in the market share for aluminum, usually their biggest seller. Information related to Sunshine's production for the most recent year follows: The owners have heard of other companies in the industry that are now using an activity-based costing system and are curious how an ABC system would affect their product costing decisions. After analyzing the indirect cost pool for Sunshine, six activities were identified as

Explanation / Answer

Answer:

Answer:b

Answer:c ABC uses the cost allocation according to their activity and simple system uses only on the basis of machine hours.

Activity Activity cost Activity cost drivers Production scheduling 95000 Production runs Material handling 45000 Material moves Machine setup 25000 Machine setups Assembly 60000 Machine hours Inspection 8000 Number of inspections Marketing cost 22800 Sales revenue Total indirect cost 255800

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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