ABC Ltd. manufactures two products, Product X and Product Y. The company uses activity-based costing (ABC) to
Question:
ABC Ltd. manufactures two products, Product X and Product Y. The company uses activity-based costing (ABC) to allocate overhead costs to products. The following information is available for the current period:
Overhead Costs: $200,000
Activity Cost Pools and Activity Measures:
Activity Cost Pool: Product Design
Activity Measure: Number of Designs
Total Cost: $60,000
Number of Designs: 12
Activity Cost Pool: Machine Setup
Activity Measure: Number of Setups
Total Cost: $80,000
Number of Setups: 20
Activity Cost Pool: Quality Control
Activity Measure: Number of Inspections
Total Cost: $60,000
Number of Inspections: 30
Activity Cost Pool: Material Handling
Activity Measure: Pounds of Material Handled
Total Cost: $100,000
Pounds of Material Handled: 10,000
Product X and Product Y each require one design, five setups, five inspections, and 2,000 pounds of material. Calculate the total overhead cost allocated to each product using activity-based costing.
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison