Q13-2: Randy’s Components uses an activity based costing system for its product
ID: 2604266 • Letter: Q
Question
Q13-2: Randy’s Components uses an activity based costing system for its product costing. For the last quarter, the following data relates to costs, output volume and cost drivers. If set-up costs are driven by the number of production runs, what are the correct set-up costs for each product?
Overhead Costs
£
Machinery
172,000
Set-ups
75,000
Materials Handling
25,000
Total
272,000
Question 6. 6. Q13-2: Randy’s Components uses an activity based costing system for its product costing. For the last quarter, the following data relates to costs, output volume and cost drivers:
Overhead Costs
£
Machinery
172,000
Set-ups
75,000
Materials Handling
25,000
Total
272,000
Product information
A
B
C
Production and sales units
5,000
3,500
2,800
Number of production runs
11
9
6
Number of stores orders
15
10
9
(Points : 9)
Potential Matches:
1 : £8.65
2 : £8.24
3 : £9.27
Answer
_____: Product A
_____: Product B
_____: Product C
Overhead Costs
£
Machinery
172,000
Set-ups
75,000
Materials Handling
25,000
Total
272,000
Explanation / Answer
Set up cost = $ 75000
Number of production runs = 26
Cost of one production run = $ 2884.62
Thus, setup cost for each product would be
Product Working Cost A 2884.62 * 11 $ 31731 B 2884.62 * 9 $ 25962 C 2884.62 * 6 $ 17308Related Questions
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