Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other....

Transcribed Image Text:

Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Activity Cost Pools Equipment depreciation Indirect labor Total Machining $ 9,800 5,100 Setting Up $ 49,700 3,100 Other $ 24,200 4,300 Total $ 83,700 12,500 $ 14,900 $ 52,800 $ 28,500 $ 96,200 Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below: Product Z3 Product T1 Total MHs Batches 6,200 850 6,400 1,450 12,600 2,300 Sales (total) Direct materials (total) Direct labor (total) Product Z3 Product T1 $ 234,800 $ 257,500 $ 85,000 $ 98,000 $ 110,400 $ 106,200 a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing. Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Activity Cost Pools Equipment depreciation Indirect labor Total Machining $ 9,800 5,100 Setting Up $ 49,700 3,100 Other $ 24,200 4,300 Total $ 83,700 12,500 $ 14,900 $ 52,800 $ 28,500 $ 96,200 Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below: Product Z3 Product T1 Total MHs Batches 6,200 850 6,400 1,450 12,600 2,300 Sales (total) Direct materials (total) Direct labor (total) Product Z3 Product T1 $ 234,800 $ 257,500 $ 85,000 $ 98,000 $ 110,400 $ 106,200 a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing.