Assume a company manufactures only two products14,000 units of Product A and 6,000 units of Product B.
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume a company manufactures only two products14,000 units of Product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B:
Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | |
---|---|---|---|---|
Machining | Machine-hours | $ 300,000 | 12,000 | MH |
Machine setups | Number of setups | $ 150,000 | 200 | Setups |
Product design | Number of products | $ 78,000 | 2 | Products |
Activity Measure | Product A | Product B |
---|---|---|
Machine-hours | 9,000 | 6,000 |
Number of setups | 50 | 150 |
Number of products | 1 | 1 |
Using the ABC system, how much overhead cost would be assigned from the Machining cost pool to Product A?
Related Book For
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison
Posted Date: