Mamata Inc., a manufacturing company of drugs, is considering switching from its traditional cost method to a newly implemented system by their production head. It is activity-based costing so that the two products, Z serum, and W serum, can be sold at their reasonable cost and make them price competitive in the market.

 Below are the production details that have been derived from the production sheet.

• Compute the activity rate for each activity cost pool. 

 

Transcribed Image Text:

A B Activity Cost Estimated Overhead 3 Pool 4 Purchasing Material 6 Handling 5 Production 7 Steps 8 Inspection 9 Assembling Machine 10 Maintenance 11 60,000.00 75,000.00 C Cost Driver Number of Purchase Orders Number of Purchase Receipts 1,01,250.00 Number of Setups 80,000.00 Inspection Hours 40,000.00 Assembly Hours 1,50,000.00 Machine Hours D Expected Activity Z serum W serum 410 590 580 E 250 1500 4000 920 1000 2500 4000 20000 20000 LL Total 1000 1500 1250 4000 8000 40000 G A B Activity Cost Estimated Overhead 3 Pool 4 Purchasing Material 6 Handling 5 Production 7 Steps 8 Inspection 9 Assembling Machine 10 Maintenance 11 60,000.00 75,000.00 C Cost Driver Number of Purchase Orders Number of Purchase Receipts 1,01,250.00 Number of Setups 80,000.00 Inspection Hours 40,000.00 Assembly Hours 1,50,000.00 Machine Hours D Expected Activity Z serum W serum 410 590 580 E 250 1500 4000 920 1000 2500 4000 20000 20000 LL Total 1000 1500 1250 4000 8000 40000 G

Answer rating: 100% (QA)

To apply activitybased costing ABC to Mamata Incs production process we need to calculate the predetermined overhead rates for each cost pool The pred... View the full answer