A company has budgeted overhead costs of Rp 64,000,000. It has allocated overhead on a plantwide...

 

Transcribed Image Text:

A company has budgeted overhead costs of Rp 64,000,000. It has allocated overhead on a plantwide basis to its two products (Product A and Product B) using direct labor hours which are estimated to be 64,000 for the current year. The company has decided to switch to activity-based costing. The two cost pools are purchasing (cost driver is number of purchase orders) and machining (cost driver is machine hours). Overhead allocated to the purchasing cost pool is Rp 15,250,000 and Rp 48,750,000 is allocated to the machining cost pool. Additional information related to these pools is as follows. Number of purchase orders Machine hours Product A 250 20.500 What is the overhead rates using the traditional approach? What amount of overhead would be allocated to the wool and cotton product lines using the traditional approach, assuming direct labor hours were incurred evenly between the wool and cotton? Using activity based costing, calculate the overhead rate for purchasing activity. Using activity based costing, calculate the overhead rate for machining activity. Determine the amount of overhead allocated to Product A using activity-based costing. Determine the amount of overhead allocated to Product B using activity-based costing. 40,000 1,600 30,500 975 32,000,000 N/A Product B 150 29.500 38,125 1,200 500 50,000 1,000 600 2,000 N/A 15,250,000 48,750,000 31,925,000 25,706,250 32,075,000 39,437,500 24,562,500 38,293,750 64,000,000 A company has budgeted overhead costs of Rp 64,000,000. It has allocated overhead on a plantwide basis to its two products (Product A and Product B) using direct labor hours which are estimated to be 64,000 for the current year. The company has decided to switch to activity-based costing. The two cost pools are purchasing (cost driver is number of purchase orders) and machining (cost driver is machine hours). Overhead allocated to the purchasing cost pool is Rp 15,250,000 and Rp 48,750,000 is allocated to the machining cost pool. Additional information related to these pools is as follows. Number of purchase orders Machine hours Product A 250 20.500 What is the overhead rates using the traditional approach? What amount of overhead would be allocated to the wool and cotton product lines using the traditional approach, assuming direct labor hours were incurred evenly between the wool and cotton? Using activity based costing, calculate the overhead rate for purchasing activity. Using activity based costing, calculate the overhead rate for machining activity. Determine the amount of overhead allocated to Product A using activity-based costing. Determine the amount of overhead allocated to Product B using activity-based costing. 40,000 1,600 30,500 975 32,000,000 N/A Product B 150 29.500 38,125 1,200 500 50,000 1,000 600 2,000 N/A 15,250,000 48,750,000 31,925,000 25,706,250 32,075,000 39,437,500 24,562,500 38,293,750 64,000,000

Answer rating: 100% (QA)

Overhead rate using traditional approach Amount of overhead allocated Using ABC activity rate for pu... View the full answer