Question: I cant figure out the answer to this problem Financial and Managerial Accounting 14th edition, Warren/Reeve/Duchac Wuestion #22 Toaster oven Total Activity-Based Costing and Product
Toaster oven Total Activity-Based Costing and Product Cost Distortion Four Finger Appliance Company manufactures small kitchen appliances. The product line consists of blenders and toaster ovens. Four Finger Appliance presently uses the multiple production department factory overhead rate method. The factory overhead is as follows: Assembly Department $206,700 Test and Pack Department 112,200 Total $318,900 The direct labor information for the production of 5,300 units of each product is as follows: Assembly Department Test and Pack Department Blender 2,250 dih 6,750 din 6,750 2,250 9,000 din 9,000 din Four Finger Appliance used direct labor hours to allocate production department factory overhead to products, The management of Four Finger Appliance Company has asked you to use activity-based costing to allocate factory overhead costs to the two products. You have determined that $31,200 of factory overhead from each of the production departments can be associated with setup activity ($62,400 in total). Company records indicate that blenders required 50 setups, while the toaster ovens required 110 setups. Each product has a production volume of 5,300 units. If required, round all per unit answers to the nearest cent. a. Determine the three activity rates (assembly, test and pack, and setup). $ X Assembly Activity per dih $ x Test and Pack Activity 32 per dih $ Setup Activity 390 per setup b. Determine the total factory overhead and factory overhead per unit allocated to each product using the activity rates in (a). Product Total Factory Overhead Factory Overhead Cost Per Unit $ X $ X Blender 156,053 29.44 $ X $ X Toaster oven 225,247 42.50 68.67
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