Activity-based costing and product cost distortion Instructions Activity Table-B
ID: 2522275 • Letter: A
Question
Activity-based costing and product cost distortion Instructions Activity Table-Blenders Activity Table-Toaster Ovens Instructions 1Assembly Department 2 Test and Pack Department 3 Total $252,230.00 203,37000 455,600.00 The direct labor information for the production of 7,550 units of each product is as follows: Department Assembly Test and Pack Blender 605 dlh2,380 dih Toaster oven 2,615 750 Total 3,220 dih 3,130 dlh Four Finger Appliance used direct labor hours to allocate production department factory overhead to products Check My Work All work saved 30Explanation / Answer
Four Finger Appliance
Determination of predetermined overhead rate using direct labor hours (DLH) as basis –
Total estimated overhead cost = $455,600
Total direct labor hours for the products, Blender and Toaster oven = 3,220 + 3,130 = 6,350
Overhead cost per direct labor hour = 455,600/6,350 = $71.75
Activity Table - Toaster Ovens
Toaster Ovens
Activity
Activity-Base
Usage
Activity Rate
Activity Cost
Assembly Activity
2,615 DLH
$71.75
$187,621
Test and Pack
750 DLH
$71.75
$53,811
Total
$241,432
Units
7,550
Factory overhead cost per unit
$31.98
Activity cost = activity base x activity rate
Assembly = 2,615 DLH x $71.75 = $187,621
Test and Pack = 750 x $71.75 = $53,811
Activity Table - Blenders
Blenders
Activity
Activity-Base
Usage
Activity Rate
Activity Cost
Assembly Activity
605 DLH
$71.75
$43,408
Test and Pack
$2,380
$71.75
$170,760
Total
$214,168
Units
7,550
Factory overhead cost per unit
$28.37
Activity cost = activity base x activity rate
Assembly = 605 DLH x $71.75 = $43,408
Test and Pack = 2,380 DLH x $71.75 = $170,760
Activity Table - Toaster Ovens
Toaster Ovens
Activity
Activity-Base
Usage
Activity Rate
Activity Cost
Assembly Activity
2,615 DLH
$71.75
$187,621
Test and Pack
750 DLH
$71.75
$53,811
Total
$241,432
Units
7,550
Factory overhead cost per unit
$31.98
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