Instructions s a diversited manufacturer that manufactures three products (Alpha
ID: 2545117 • Letter: I
Question
Instructions s a diversited manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process, Senior Mello Manufacturing Company management has asked the controller to conduct an acivity-based costing study, The controller identified the amount of the organization as follows factory overhead required by the critical activities of Activity Cost Pool 259,200.00 5,000.00 750.00 0000.00 123,200.00 507,150.00 Activity 2Production Setup Material handling s Inspection Product engineering TotalExplanation / Answer
ABC Costing Activity Overhead Cost Driver Quantity Allocation Rate Indirect Costs Production 259,200.00 3,240 mach hrs 80.00 per MH Setup 55,000.00 550 setups 100.00 per Setup Material Handling 9,750.00 325 parts 30.00 per part Inspection 60,000.00 1,200 insp. hrs 50.00 per insp.hr Product Engineering 123,200.00 440 engg. Hrs 280.00 per engg. Hr Total 507,150.00 Assigning Overhead Cost to Product Model Using ABC Method Activity Based Overhead Rate Alpha Beta Omega Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Cost Driver Incurred OH Allocated Production 80.00 per MH 1,440 mach hrs 115,200.00 1,080 mach hrs 86,400.00 720 mach hrs 57,600 Setup 100.00 per Setup 75 setups 7,500.00 165 setups 16,500.00 310 setups 31,000 Material Handling 30.00 per part 65 parts 1,950.00 80 parts 2,400.00 180 parts 5,400 Inspection 50.00 per insp.hr 400 insp. hrs 20,000.00 300 insp. hrs 15,000.00 500 insp. hrs 25,000 Product Engineering 280.00 per engg. Hr 125 engg. Hrs 35,000.00 175 engg. Hrs 49,000.00 140 engg. Hrs 39,200 Total Activity Cost 179,650 169,300 158,200 No. Of Units 1,800 1,350 900 Activity Cost per Unit 99.81 125.41 175.78