Reschman Co. manufactures two products. Following is a production and cost analysis for each product for 2013:
Elysia Sanderson, the firm€™s cost accountant, has just returned from a seminar on activity-based costing. To apply the concepts she learned, she decides to analyze the costs incurred for Products A and B on an activity basis. In doing so, she specifies the following first and second allocation processes:
a. Determine the total overhead for Reschman Co.
b. Determine the plantwide overhead rate for the company, assuming the use of direct labor hours.
c. Determine the cost per unit of Product A and Product B, using the overhead rate found in (b).
d. Determine the cost allocations to departments (first-stage allocations). Allocate costs from the departments in the following order: building occupancy, purchasing, and power. Finish the cost allocations for one department to get an €œadjusted€ cost to allocate to the next department.
e. Using the allocations found in (d), determine the cost allocations to products (second-stage allocations).
f. Determine the cost per unit of Product A and Product B using the overhead allocations found in(e).
Step by Step Answer: