Vanguard Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost
Question:
Activity Cost Pool | Total Cost | Total Activity | |||
Assembly | $ | 942,480 | 66,000 | machine-hours | |
Processing orders | $ | 85,050 | 1,800 | orders | |
Inspection | $ | 126,854 | 1,820 | inspection-hours | |
The company makes 430 units of product O37W a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit.
According to the activity-based costing system, the average cost of product O37W is closest to:
$94.11 per unit.
$89.72 per unit.
$65.18 per unit.
$92.49 per unit.
2. Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
Activity | Cost Driver | Amount | M | XY | ||||
Production setups | Number of setups | $ | 82,000 | 8 | 12 | |||
Material handling | Number of parts | 48,000 | 56 | 24 | ||||
Packaging costs | Number of units | 130,000 | 80,000 | 50,000 | ||||
$ | 260,000 | |||||||
What is the total overhead allocated to Product M using the current system?
3. Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
Activity | Cost Driver | Amount | M | XY | ||||
Production setups | Number of setups | $ | 82,000 | 8 | 12 | |||
Material handling | Number of parts | 48,000 | 56 | 24 | ||||
Packaging costs | Number of units | 130,000 | 80,000 | 50,000 | ||||
$ | 260,000 | |||||||
What is the total overhead per unit allocated to Product M using activity-based costing (ABC)? |
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer