Can i please get help with problem P4-3B please! 2 4 Activity-Based Costing cont
ID: 2537786 • Letter: C
Question
Can i please get help with problem P4-3B please!
2 4 Activity-Based Costing controller to prepare an es the following Before finalizing its decision, management asks Kinnard analysis using activity-based costing (ABC). The controller accumulat information about overhead for the year ended December 31, 2017 Expected Activity- Based Overhead Rate $31 29 31 89 Use of Cost Estimated Overhead $ 775,000 Drivers ActivityCost Driver Number of orders Machine setups Number of setups 580,000 25,000 20,000 3, 100,000 100,000 5,000 Purchasing Machining Quality control Machine hours Number of inspections 445,000 The cost drivers used for each product were: Purchase orders 11,250 Machine setups 11,000 40,000 2,750 Cost Driver ElitePreferred Total 25,000 20,000 100,000 5,000 13,750 9,000 60,000 2,250 Machine hours Inspections Instructions (a) Assign the total 2017 manufacturing overhead costs to the two products using (a) Elite $2,152,500 activity-based costing (ABC) and determine the overhead cost per unit. (b) Costunit-Elite $807.63 (b) What was the cost per unit and gross profit of each model using ABC costing? Are management's future plans for the two models sound? Explain. c) ium, wood armoires forExplanation / Answer
Solution 1:
Cost per unit and selling price per unit cannot be determined as same is not given in the question.
Determination of activity rate for each activity & allocation of overhead Activity Estimated Overhead Cost Activity Base Usage of Activity Base Activity Rate Elite Preferred Usage Allocated Costs Usage Allocated Costs Purchasing $775,000.00 Nos of orders 25000 $31.00 11250 $348,750.00 13750 $426,250.00 Machine Setups $580,000.00 Nos of setups 20000 $29.00 11000 $319,000.00 9000 $261,000.00 Machining $3,100,000.00 Machine Hours 100000 $31.00 40000 $1,240,000.00 60000 $1,860,000.00 Quality Control $445,000.00 Nos of inspections 5000 $89.00 2750 $244,750.00 2250 $200,250.00 Total $4,900,000.00 $2,152,500.00 $2,747,500.00