110% Search E4-5 Assigning Costs Using Activity Proportions ILO 4-5, 4-6 Gable C
ID: 2611378 • Letter: 1
Question
110% Search E4-5 Assigning Costs Using Activity Proportions ILO 4-5, 4-6 Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows Total Cost of Pool 398,200 89,725 70,413 Estimated Driver 0,500 9,250 490 Activity Cost Pools Cost Driver Designing costs Setup costs Number of machine hours Number of design hours Number of batches Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows Product A Product BProduct C 10,500 Number of machne hours Number of design hours Number of batches 35,000 3,700 45,000 2.050 170 3,500 Round your other Required: 1. Using activity proportions, intermediate calculations and final answer to the nearest whole dolliar delermine the amount of overhead ass god to each product- (Round Activity Proportion to 2 decmal places (eg-3216 Product A Product EB Product C 8 4 6Explanation / Answer
Product
A
B
C
Total
Number of machine hours
35,000
45,000
10,500
90,500
Number of design hours
3,700
2,050
3,500
9,250
Number of batches
40
170
280
490
Activity Cost Pools
Total cost of pools
Product A
Product B
Product C
Machining
$ 398,200
$ 154,000
$ 198,000
$ 46,200
Designing cost
$ 89,725
$ 35,890
$ 19,885
$ 33,950
Setup cost
$ 70,413
$ 5,748
$ 24,429
$ 40,236
Total
$ 558,338
$ 195,638
$ 242,314
$ 120,386
Explanation:
Machining overhead cost per hour = Total cost pools/total cost driver = $ 398,200/90,500 = $ 4.4
Designing overhead cost per hour = $ 89,725/9,250 = $ 9.7
Setup overhead cost per batch = $ 70,413/490 = $ 143.7
For Product A:
Machining overhead cost = $ 4.4 x 35,000 = $ 154,000
Designing overhead cost = $ 9.7 x 3,700 = $ 35,890
Setup overhead cost = $ 143.7 x 40 = $ 5,748
For Product B:
Machining overhead = $ 4.4 x 45,000 = $ 198,000
Designing overhead cost = $ 9.7 x 2,050 = $ 19,885
Setup overhead cost = $ 143.7 x 170 = $ 24,429
For Product C:
Machining overhead = $ 4.4 x 10,500 = $ 46,200
Designing overhead cost = $ 9.7 x 3,500 = $ 33,950
Setup overhead cost = $ 143.7 x 280 = $ 40,236
Product
A
B
C
Total
Number of machine hours
35,000
45,000
10,500
90,500
Number of design hours
3,700
2,050
3,500
9,250
Number of batches
40
170
280
490
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