The ABC system is designed to allow direct material and direct labour to be traced directly...

 

Transcribed Image Text:

The ABC system is designed to allow direct material and direct labour to be traced directly to each of the company's four main products. The system also includes four activity cost pools for overhead: Quality Control and Inspection, Order Processing, Delivery and Installation, and Other. The activity measures are units produced for Quality Control and Inspection, number of orders for Order Processing, and number of deliveries for Delivery and Installation. The Other cost pool has no activity measure. The following costs will be assigned using the ABC system: Indirect factory Salaries Delivery Crew Wages Expense $520,000 $140,000 The distribution of resource consumption across the activity cost pools is as follows: Quality Control and Inspection Delivery and Installation Processing Order Other Totals Indirect factory salarles. Delivery crew wages expense.... 50% 0% 25% 75% 20% D% 5% 15% 10% D0% ...... The ABC system at Movie Time contains the following activity cost pools and activity rates this year: Activity Total Activity Quality control and inspection. Delivery and installation. Order processing Other . 4800 units produced 1200 deliveries 920 orders processed None Activity data have also been supplied for the leather recliner product line: Total Activity for the Leather Recliner Product Line Activity Quality control and inspection.. Delivery and installation. Order processing. 1200 units produced 300 deliveries 230 orders processed Required: 1. Carry out the first-stage allocations of costs to activity cost pools and using the first-stage allocation compute the activity rates for the ABC system. Round to the nearest whole cent. 2. Determine the total overhead cost that would be assigned to the leather recliner product line using the ABC system. The ABC system is designed to allow direct material and direct labour to be traced directly to each of the company's four main products. The system also includes four activity cost pools for overhead: Quality Control and Inspection, Order Processing, Delivery and Installation, and Other. The activity measures are units produced for Quality Control and Inspection, number of orders for Order Processing, and number of deliveries for Delivery and Installation. The Other cost pool has no activity measure. The following costs will be assigned using the ABC system: Indirect factory Salaries Delivery Crew Wages Expense $520,000 $140,000 The distribution of resource consumption across the activity cost pools is as follows: Quality Control and Inspection Delivery and Installation Processing Order Other Totals Indirect factory salarles. Delivery crew wages expense.... 50% 0% 25% 75% 20% D% 5% 15% 10% D0% ...... The ABC system at Movie Time contains the following activity cost pools and activity rates this year: Activity Total Activity Quality control and inspection. Delivery and installation. Order processing Other . 4800 units produced 1200 deliveries 920 orders processed None Activity data have also been supplied for the leather recliner product line: Total Activity for the Leather Recliner Product Line Activity Quality control and inspection.. Delivery and installation. Order processing. 1200 units produced 300 deliveries 230 orders processed Required: 1. Carry out the first-stage allocations of costs to activity cost pools and using the first-stage allocation compute the activity rates for the ABC system. Round to the nearest whole cent. 2. Determine the total overhead cost that would be assigned to the leather recliner product line using the ABC system.

Answer rating: 100% (QA)

1 The distribution of resource and consumption across the activity cost pool Quality Delivery Orde... View the full answer