An intern suggested that the company use activity-based costing to cost its prod

Question

An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea. It came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities are listed as follows: Expected Activity Activity Cost Pool and Activity Measure Estimated Overhead Cost Flexible Rigid Total Purchase orders (number of orders) $ 20,000 100 300 400 Rework requests (number of requests) 10,000 60 140 200 Product testing (number of tests) 210,000 900 1,200 2,100 Machine related (machine-hours) 360,000 1,500 2,500 4,000 $ 600,000 Compute the activity rate for each of the activity cost pools. 3. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be assigned to each model for the year. b. Compute the unit product cost for one unit of each model. (Round your answers to 2 decimal places.)

Explanation / Answer

1. Computation of activity rate for each of the activity cost pools.

3a. Calculation of total amount of overhead that would be assigned to each model for the year.

3b. Computation the unit product cost for one unit of each model.

No of unit is missing so this part can not be computed.

Activity Cost pool Estimated Overhead $ Total Expected Activity Per Activity rate= Estimated overhead/ Totak expected activity $) Purchase Order 20,000 400 purchase orders 50 Rework request 10,000 200 requests 50 Product Testing 210,000 2100 tests 100 Machine Related 360,000 4000 machine hours 90

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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