Carter, Inc. uses a traditional volume-based costing system in which direct labor hours are the allocation...

  
 

Transcribed Image Text:

Carter, Inc. uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter produces two different products: Product A, which uses 260,000 direct labor hours, and Product B, which uses 140,000 direct labor hours. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost of $712,000 across three activities: Design, Production, and Inspection. Under the traditional volume-based costing system, the predetermined estart 13 overhead rate is $1.78/direct labor hour. Under the ABC system, the cost of each activity and proportion of the activity drivers used by each product are as follows: Proportion Proportio used by Product E Total used by Cost Design (Engineering Hours) Production (Direct Labor Hours) Inspection (Batches) $100,000 $400, 000 $212, 000 Product A 50% 65% 75% 50% 35% 25% Required: a. Calculate the indirect manukcturing costs assigned to Product A under the traditional costing system. Indirect Manufacturing Costs 462,800 Ne b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system. Uni < Prev 1 of 37 Next > Con MacBook Pro Ricardo b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system. Indirect Manufacturing Costs 249,200 c. Calculate the indirect manufacturing costs assigned to Product A under the ABC system. Indirect Manufacturing Costs d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs Prev 1 of 37 Next > A TO MacBook Pro estart yo d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs e. Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC? Product A Product B Ne Un <Prev 1 of 37 E Next > Cor S TO MacBook Pro Carter, Inc. uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter produces two different products: Product A, which uses 260,000 direct labor hours, and Product B, which uses 140,000 direct labor hours. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost of $712,000 across three activities: Design, Production, and Inspection. Under the traditional volume-based costing system, the predetermined estart 13 overhead rate is $1.78/direct labor hour. Under the ABC system, the cost of each activity and proportion of the activity drivers used by each product are as follows: Proportion Proportio used by Product E Total used by Cost Design (Engineering Hours) Production (Direct Labor Hours) Inspection (Batches) $100,000 $400, 000 $212, 000 Product A 50% 65% 75% 50% 35% 25% Required: a. Calculate the indirect manukcturing costs assigned to Product A under the traditional costing system. Indirect Manufacturing Costs 462,800 Ne b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system. Uni < Prev 1 of 37 Next > Con MacBook Pro Ricardo b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system. Indirect Manufacturing Costs 249,200 c. Calculate the indirect manufacturing costs assigned to Product A under the ABC system. Indirect Manufacturing Costs d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs Prev 1 of 37 Next > A TO MacBook Pro estart yo d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system. Indirect Manufacturing Costs e. Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC? Product A Product B Ne Un <Prev 1 of 37 E Next > Cor S TO MacBook Pro

Answer rating: 100% (QA)

a Indirect manufacturing cost assigned to Product A under the traditional costing system ... View the full answer