(This exercise is a continuation of Exercise 7–3; it should be assigned only if Exercise 7–3 is also assigned.) The ABC system at MovieTime contains the following activity cost pools and activity rates this year:
Activity Total Activity
Quality control and inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800 units produced
Delivery and installation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200 deliveries
Order processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 orders processed
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Activity data have also been supplied for the leather recliner product line:
Total Activity for the Leather
Activity Recliner Product Line
Quality control and inspection. . . . . . . . . . . . . . . . .. 1,200 units produced
Delivery and installation. . . . . . . . . . . . . . . . . . . . . . . 300 deliveries
Order processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 orders processed
Required:
1. Using the first-stage allocation from Exercise 7–3 and the above data, 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.