2 Greife Corporation\'s activity-based costing system has three activity cost po

Question

2 Greife Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: Setting Up Other $ 65,436 $108,992 21,900 03:58 12 Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products: Product KO Product w9 Total MHs Batches 2,630 1,300 8.850 11,480 2,080 780 Additional data concerning the company's products appears below Sales (total) Direct materials (total) Direct labor (total) Product KO Product H9 $285,000 $254,000 $ 80,500 91,800 $ 94,400 59,900 a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing.

Explanation / Answer

Req A: STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity ACTIVITY COST POOL Measures Overheads Activity Rate Machining MH 65436 11480 5.70 Setting up Setups 108,992 2,080 52.40 Req B: OH cost assigned Product KO Product W9 Activity Rate Activity OH cost Activity OH cost Machining 5.7 2630 14991 8850 50445 Setting up 52.4 1300 68120 780 40872 TOTAL OVERHEADS 83111 91317 OH cost Product Ko 83111 Product W9 91317 Req C: Product Ko Product W9 Sales revenue 285,000 254,000 Less: Cost material 80500 91800 labouor 94400 59900 Overheads 83111 91317 Product margin 26,989 10,983 Margin Product Ko 26989 Product W9 10983

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