he current cost accounting system charges overhead to products based on direct labor hours. What unit product costs will be reported for the three products if the current cost system continues to be used? 

d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountants classification of cost pools is used?

 

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Churchill Products is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The company's cost accountant has identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Utilities Scheduling and setup Material handling Costs $290,000 310,000 755,000 Activity Drivers 58,000 machine-hours 620 setups 1,510,000 pounds of material The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Total direct costs (material and labor) Total machine-hours. Total number of setups Total pounds of material Total direct labor-hours Number of units produced Oval $ 90,000 30,000 100 460,000 3,500 4,400 Products Round $70,000 10,000 320 290,000 1,000 2,000 Square $ 80,000 18,000 200 760,000 5,500 6,000 Churchill Products is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The company's cost accountant has identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Utilities Scheduling and setup Material handling Costs $290,000 310,000 755,000 Activity Drivers 58,000 machine-hours 620 setups 1,510,000 pounds of material The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Total direct costs (material and labor) Total machine-hours. Total number of setups Total pounds of material Total direct labor-hours Number of units produced Oval $ 90,000 30,000 100 460,000 3,500 4,400 Products Round $70,000 10,000 320 290,000 1,000 2,000 Square $ 80,000 18,000 200 760,000 5,500 6,000

Answer rating: 100% (QA)

Cost Driver Rate Under activitybased costing overhead ... View the full answer