please explain in steps. thanks E5.29 (LO 1, 2, 3) Healthy Products Inc. uses a traditional product costing system toassign overhead costs uniformly to all products. To meet Canadian Food InspectionAgency (CFIA) requirements and to assure its customers of safe, sanitary, andnutritious food, Healthy Products engages in a high level of quality control. It assignsits quality-control overhead costs to all products at a rate of 17% of direct labour costs.Its direct labour cost for the month of June for its low-calorie dessert line is $65,000.In response to repeated requests from its vice-president, finance, Healthy Products'management agrees to adopt activity-based costing. Data relating to the low-caloriedessert line for the month of June are as follows:Number ofCostDrivers UsedperActivity Cost PoolsCost DriversRateActivityInspections of materialNumber of$ 0.80 per6,000receivedkilogramskilogramsIn-process inspectionsNumber of$ 0.33 per10,000 servingsservingsservingCFIA certificationCustomer orders$12.00 per order420 ordersInstructionsa. Calculate the quality-control overhead cost to be assigned to the low-caloriedessert product line for the month of June using1. the traditional product costing system (direct labour cost is the cost driver),and2. activity-based costing.b. By what amount does the traditional product costing system undercost or overcostthe low-calorie dessert line relative to costing under ABC?c. Classify each of the activities as value-added or non-value-added.kilogram

(a) Overhead cost to be assigned under traditional costing = $65,000 * 17% = $11,050 (a)…

a. Calculate the quality-control overhead cost to be assigned to the low-calorie dessert product line for the month of June using 1. the traditional product costing system (direct labour cost is the cost driver), and 2. activity-based costing. b. By what amount does the traditional product costing system undercost or overcost the low-calorie dessert line relative to costing under ABC? c. Classify each of the activities as value-added or non-value-added.

a. Calculate the quality-control overhead cost to be assigned to the low-calorie dessert product line for the month of June using 1. the traditional product costing system (direct labour cost is the cost driver), and 2. activity-based costing. b. By what amount does the traditional product costing system undercost or overcost the low-calorie dessert line relative to costing under ABC? c. Classify each of the activities as value-added or non-value-added.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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