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2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Estimated Overhead Cost Deluxe Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Total $ 189,000 1,100 1,600 400 800 252,000 350,000 1,250,000 5,000 Product testing (number of tests) Machine related (machine-hours) 12,500 20,000 30,000 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. 2,700 1,200 17,500 50,000

2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Estimated Overhead Cost Deluxe Regular Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Total $ 189,000 1,100 1,600 400 800 252,000 350,000 1,250,000 5,000 Product testing (number of tests) Machine related (machine-hours) 12,500 20,000 30,000 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. 2,700 1,200 17,500 50,000

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter6: Statistical Inference
Section: Chapter Questions
Problem 43P: The Port Authority sells a wide variety of cables and adapters for electronic equipment online. Last...
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Midterm Exam - Wednes... i Saved 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Activity Cost Pool and Activity Measure (number of orders) (number of requests) Estimated Overhead Cost 189,000 252,000 Deluxe Purchase orders Rework requests Regular Total 1,100 1,600 Product testing (number of tests) 800 350,000 400 5,000 Machine related (machine-hours) 12,500 1,250,000 20,000 30,000 12 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Cost Pool Activity Rate Purchase orders per order Rework requests per request per test Product testing Machine related per MH 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.) Regular Deluxe Total overhead cost $ 2,700 1,200 17,500 50,000
Transcribed Image Text:Midterm Exam - Wednes... i Saved 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: Activity Activity Cost Pool and Activity Measure (number of orders) (number of requests) Estimated Overhead Cost 189,000 252,000 Deluxe Purchase orders Rework requests Regular Total 1,100 1,600 Product testing (number of tests) 800 350,000 400 5,000 Machine related (machine-hours) 12,500 1,250,000 20,000 30,000 12 $2,041,000 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Cost Pool Activity Rate Purchase orders per order Rework requests per request per test Product testing Machine related per MH 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the total amount of overhead that would be applied to each model for the year. (Do not round intermediate calculations and round your final answers to nearest whole dollar amount.) Regular Deluxe Total overhead cost $ 2,700 1,200 17,500 50,000
g Enabled: MGMT8500-Midterm Exam - Wednes... Saved Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and 32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires 1.2 hours. Materials and labour costs follow: Deluxe $125 20 Regular $85 12 Direct materials cost per unit Direct labour cost per hour labour hours as the basis for allocating overhead costs to products. and Round your answers to 2
Transcribed Image Text:g Enabled: MGMT8500-Midterm Exam - Wednes... Saved Siegel Corporation manufactures a product available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to capture a new segment of the market. Since the introduction of the deluxe model, the company's profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on the basis of direct labour-hours. At the beginning of the current year, management estimated that $2,041,000 in overhead costs would be incurred and the company would produce and sell 5,000 units of the deluxe model and 32,000 units of the regular model. The deluxe model requires 2.5 hours of direct labour time per unit, and the regular model requires 1.2 hours. Materials and labour costs follow: Deluxe $125 20 Regular $85 12 Direct materials cost per unit Direct labour cost per hour labour hours as the basis for allocating overhead costs to products. and Round your answers to 2
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