1.) Company has two products: A and B. The annual production and sales of Produc
ID: 2486598 • Letter: 1
Question
1.)
Company has two products: A and B. The annual production and sales of Product A is 1,950 units and of Product B is 1,350 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $101,600.
The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.) The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to:
A.) $7.45
B.) $42.33
C.) $59.98
D.) $9.17
2.)
A.) credit to Work in Process of $93,000
B.) debit to Manufacturing Overhead of $88,000
C.) credit to Manufacturing Overhead of $88,000
D.) debit to Work in Process of $93,000
3.)
The total gross margin for the month under absorption costing is:
$109,060
$20,090
$144,180
$154,980
Activites Cost Pools Estimated Overhead Costs Product A Product B Total Activity 1 $31394 1250 850 2100 Activity 2 $17882 1950 450 2400 General Factory $52324 785 960 1745 Total $101600Explanation / Answer
1.
Answer: A $7.45
2.
Answer: C Credit to Manufacturing Overhead of 88,000
3.
Selling Price - Variable Cost = Contribution margin
= 148 - 94 = 54
Contribution margin x units sold
= $54 x 2870 = 154,980
Answer: $154,980
(a) (b) (a) / (b) Activity Cost Pool Estimated Cost Estimated Activity Activity Rate Activity 2 17,882 2,400 7.45Related Questions
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