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Not Secure v2.ce ngagenow.com Irn/takeAssignment/takeAssignment Main.do?invoker= assignments&takeAssignmentSessionLocator;=assignment-take∈ progress-false Chapter 18 Assignment eBook Calculator Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows Activity Production Setup Inspection Shipping Customer service 1. EX.18-01 2. EX.18-04.ALGO 3. EX.18-06.ALGO 4. EX.18-11 ALGO 5. EX.18-13.ALGO 6. EX.18-17 7. EX.18-18 ALGO 8. PR.18-01B.ALGO 9. PR.18-04B ALGO Budgeted Activity Cost $433,200 263,200 121,600 118,800 49,600 $986,400 Total The activity bases identified for each activity are as follows Activity Production Setup Inspection Shipping Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Activity Base Machine hours Number of setups Number of inspections Number of customer orders Customer Number of Number of Number of Service Units Setups Inspections Customer Orders Machine Hours Requests Check My Work Previous Progress: 9/9 items Assignment Score: 34.8% All work saved. Email Instructor Save and Exit Submit Assignment for Grading

Explanation / Answer

Answer 1

Calculation of activity rate for each activity

Answer 2

Working Note : Calculation of total acivity cost & per unit acivity cost of all the 3 products

Activity Base

(A)

180 * $376 per setup

= $67,680

270* $376 per setup

= $101,520

250 * $376 per setup

= $94,000

320 * $76 per move =

$24,320

800 * $76 per move

= $60,800

40 *$124 per test run

= $4,960

250 *$124 per test run = $31,000

Summary :

Answer 3

The unit costs are different because the product consume many activities in the ratio different from the Volume

Activity Working [Activity cost / Cost Driver] Activity rate Production $433,200 / 7,600 $57 per machine hr Setup $263,200 / 700 $376 per setup Inspection $121,600 / 1,600 $76 per move Shipping $118,800 / 3,600 $33 per cust.ord Customer Service $49,600 / 400 $124 per test run

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