Superior Company currently uses a traditional costing system to assign overhead costs uniformly to all jobs at
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Question:
Activity Cost Pools | Cost Drivers | Expected Use of Cost Drivers per Activity | ABC Overhead Rate |
Assembling | Number of boards | ? | $0.35 |
Machining | Number of machine hours | ? | $13.00 |
Inspecting | Number of inspections | ? | $7.00 |
1) Compute the expected use of each cost driver for each activity.
2) Compute the total cost of job A492 which has $300 of direct materials cost, $280 of direct labor cost, 50 boards, 10 machine hours, and 1 inspection, using (a) the activity-based costing system AND (b) the traditional costing system.
3) By what amount does the traditional product costing system undercast or overcast the picnic table production line?
4) Classify each of the activities as value-added or non-value-added.
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