4. Nationals Inc. uses activity-based costing to determine the costs of its thre
ID: 2512897 • Letter: 4
Question
4. Nationals Inc. uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown below. (Check: Activity 1 activity rate should be a number between $7 and $10). (3 points)
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$140,000
7,500
4,000
6,000
Activity 2
$54,000
2,500
2,000
1,500
Activity 3
$38,000
15,000
25,000
30,000
Compute the company's activity rates under activity-based costing for each of the three activities.
5. Yasiel, Designs, Inc. designs custom storage solutions to businesses. The following data is from the company’s most reporting period:
Design department
Client consultation
500 contact hours
$100,000
Drawing
1,000 design hours
$70,000
Models
20,000 square feet
$25,000
Project Management
Supervision
250 days
$43,750
Billings
150 jobs
$55,000
a. Use ABC to compute overhead rates for each activity. Hint: You should have five different ABC overhead rates based on budgeted costs and overhead drivers above. (1 point)
b. Allocate costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete. Hint: Use the ABC overhead rates that you calculated in part a to allocate the overhead for each activity to this job based on the requirements of this one job. Check: Total overhead for this one job is a number between $20,000 and $23,000.
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$140,000
7,500
4,000
6,000
Activity 2
$54,000
2,500
2,000
1,500
Activity 3
$38,000
15,000
25,000
30,000
Explanation / Answer
4. The company's activity rates under activity-based costing :
Activity A = $ 8.00
Activity B = $ 9.00
Activity C= $ 0.54
Note :
5.
The correct answer is :
Note :
b.
The correct answer is $ 21,966.67
Note :
Budgeted Activity Activity Cost Pool Budgeted Cost Product A Product B Product C Total Budgeted Activity ( Product A+ B+ C) Activity Rate ( Budgeted Cost /Total Budgeted Activity ) Activity 1 140000 7,500 4,000 6,000 17500 8.00 Activity 2 54000 2,500 2,000 1,500 6000 9.00 Activity 3 38000 15,000 25,000 30,000 70000 0.54Related Questions
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