Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional
Question:
Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using ono cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325,00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of wood used. The new cost of a set of chess pieces was determined to be $298.00 per set The reduction in cost per unit of wooden chess pieces under the ABC system is due to the difference in allocation of
A. labor costs
B material costs
C. prime costs
D. indirect costs
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella