Hipster Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect

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Hipster Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity base information are provided as follows:

Activity Activity Pool Cost Activity Base

Procurement.....................$66,000....................Number of purchase orders

Scheduling..........................4,120..................Number of production orders

Materials handling...............13,280...............................Number of moves

Product development..............8100...............Number of engineering changes

Total cost................................$91500......................................................

The estimated activity-base usage and unit information for two product lines was determined from corporate records as follows:

Hipster Home Appliances Inc. is estimating the activity cost associated

a. Determine the activity rate for each activity cost pool.
b. Determine the activity-based cost per unit of each product.

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Managerial Accounting

ISBN: 978-1285866307

13th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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