Your Company has hw products A and H. the company uses activity-based costing. T

Question

Your Company has hw products A and H. the company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: What is the activity rate under the activity-based costing system for Activity 2? Your Company uses activity based costing and has estimated its costs for next year in the table below. How much of these costs would the company assign to products as overhead under a traditional (Chapter 19) costing system?

Explanation / Answer

Answer 20 :- Activity Rate for Activity 2 is option (D). $22.00 which is shown below:-

Answer 21 :-

Activity-based costing is a method of assigning indirect costs to products and services which involves finding cost of each activity involved in the production process and assigning costs to each product based on its consumption of each activity. The method to allocate Direct Material cost, Cost of Purchase components and direct labour cost remains same as in traditional costing .Manufacturing overheads are allocated differently in ABC costing.The first step in activity-based costing involves identifying activities and classifying them according to the cost hierarchy.

Overheads under Traditional Costing System:-

Direct Material Cost 625,000

Direct Labour Cost 255,000

Total 880,000

Activity Amount ($) Relevant Cost Driver (B) Activity Rate C= A/B ($) Activity 1 32,600 1000 32.6 Activity 2 17,600 800 22 Activity 3 52,500 500 105 Activity 4 123,240 1200 102.7

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

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