Thornton Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead...
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Thornton Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow Unit Level $26,400 1, 100 laborbrs. Activities Batch Level $14,520 33 setups Product Level $13,000 Percentage of use Facility Level $285,000 15,000 units Cost Cost deivver Production of 820 sets of cutting shears, one of the company's 20 products, took 120 labor hours and 6 setups and consumed 17 percent of the product-sustaining activities Required a. Had the company used labor hours as a companywide allocation base, how much overhead would a have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 820 units are produced If direct product costs are $140 and the product is priced at 30 percent above cost for what price would the product sell'under each alocation system? Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? (Round intermediate calculations to 2 decimal places. Round your final answers to the nearest whole dollar amount.) fa. Allocated cost b. Allocated cost Thornton Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow Unit Level $26,400 1, 100 laborbrs. Activities Batch Level $14,520 33 setups Product Level $13,000 Percentage of use Facility Level $285,000 15,000 units Cost Cost deivver Production of 820 sets of cutting shears, one of the company's 20 products, took 120 labor hours and 6 setups and consumed 17 percent of the product-sustaining activities Required a. Had the company used labor hours as a companywide allocation base, how much overhead would a have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 820 units are produced If direct product costs are $140 and the product is priced at 30 percent above cost for what price would the product sell'under each alocation system? Had the company used labor hours as a companywide allocation base, how much overhead would it have allocated to the cutting shears? How much overhead is allocated to the cutting shears using activity-based costing? (Round intermediate calculations to 2 decimal places. Round your final answers to the nearest whole dollar amount.) fa. Allocated cost b. Allocated cost
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for formulas and calculations refer to the image below C2 2 fe total overheads A B F H J 1 ... View the full answer
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor-Yi Tsay, Philip Old
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