14 s Howell Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation (total) Indirect labor (total) Distribution of Resource Consumption Across Activity Cost Pools Setting Up 0.30 0.10 Equipment depreciation Indirect labor Product S4 Product Co Total $ 33,800 $ 7,950 Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. MBS 8,900 6,300 15,200 Sales (total) Direct materials (total) Direct labor (total) Machining 0.30 0.30 Batches 1,300 1,800 3,100 Additional data concerning the company's products appears below: Product $4 Product CO $ 88,100 $ 75,500 $ 27,600 $ 24,900 $ 41,100 $ 33,800 Other 0.40 0.60 Required: a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d. Determine the product margins for each product using activity-based costing.
14 s Howell Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation (total) Indirect labor (total) Distribution of Resource Consumption Across Activity Cost Pools Setting Up 0.30 0.10 Equipment depreciation Indirect labor Product S4 Product Co Total $ 33,800 $ 7,950 Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. MBS 8,900 6,300 15,200 Sales (total) Direct materials (total) Direct labor (total) Machining 0.30 0.30 Batches 1,300 1,800 3,100 Additional data concerning the company's products appears below: Product $4 Product CO $ 88,100 $ 75,500 $ 27,600 $ 24,900 $ 41,100 $ 33,800 Other 0.40 0.60 Required: a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity-based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. d. Determine the product margins for each product using activity-based costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Howell Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's
overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity
cost pools' consumption of resources.
Equipment depreciation (total)
Indirect labor (total)
Distribution of Resource Consumption Across Activity Cost Pools
Setting Up
0.30
0.10
Equipment depreciation
Indirect labor
Product S4
Product CO
Total
Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are
assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products.
Sales (total)
Direct materials (total)
Direct labor (total)
$ 33,800
$ 7,950
MHS
8,900
6,300
15,200
Required A
Machining
0.30
0.30
Additional data concerning the company's products appears below:
Product S4 Product Co
$ 88,100
$ 75,500
$ 27,600
$ 24,900
$ 41,100
$ 33,800
Required B
Batches
1,300
1,800
3,100
Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.
Complete this question by entering your answers in the tabs below.
Other
0.40
0.60
Required C
Required D
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Step 1: Introduction of activity based costing
VIEWStep 2: Requirement a - Assigning the overhead costs to the activity cost pool
VIEWStep 3: Requirement b - Computation of the activity rate for each activity cost pool
VIEWStep 4: Requirement c - Computation of the amount of overhead cost assigned to each product
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