ABC Company produces two products, Nifty and So-So, and uses a costing system in which all overhead is accumulated in a single cost pool and allocated based on machine hours. Blaine's management has decided to implement ABC because a cost study has revealed significant amounts of overhead cost related to setup activity and design activity. The number of setups and the number of design hours will be the activity drivers for the two new cost pools, and machine hours will continue as the base for allocating the remaining overhead. Selected information follows for ABC Company's most recent year of operations: A ТОTAL UNITS PRODUCED 500 15,500 16,000 DIRECT MATERIAL COST PER UNIT $ 200.00 $ 20.00 TOTAL 100,000.00 310,000.00 $ 410,000.00 MACHINE HOURS 3,000 47,000 50,000 DIRECT LABOR COST 2$ 50,000 $ 350,000 $ 400,000 SETUP 120 80 200 DESIGN HOURS 6,000 4,000 10,000 OVERHEAD SETUP RELATED $ 250,000 DESIGN RELATED 350,000 OTHERS 900,000 Calculate the total and per unit reported cost for the two products by using ABC costing system.

ABC Company produces two products, Nifty and So-So, and uses a costing system in which all overhead is accumulated in a single cost pool and allocated based on machine hours. Blaine's management has decided to implement ABC because a cost study has revealed significant amounts of overhead cost related to setup activity and design activity. The number of setups and the number of design hours will be the activity drivers for the two new cost pools, and machine hours will continue as the base for allocating the remaining overhead. Selected information follows for ABC Company's most recent year of operations: A ТОTAL UNITS PRODUCED 500 15,500 16,000 DIRECT MATERIAL COST PER UNIT $ 200.00 $ 20.00 TOTAL 100,000.00 310,000.00 $ 410,000.00 MACHINE HOURS 3,000 47,000 50,000 DIRECT LABOR COST 2$ 50,000 $ 350,000 $ 400,000 SETUP 120 80 200 DESIGN HOURS 6,000 4,000 10,000 OVERHEAD SETUP RELATED $ 250,000 DESIGN RELATED 350,000 OTHERS 900,000 Calculate the total and per unit reported cost for the two products by using ABC costing system.

Name: ABC Company produces two products, Nifty and So-So, anduses a costing
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Description: ABC Company produces two products, Nifty and So-So, anduses a costing system in which all overhead is accumulated in asingle cost pool and allocated based on machine hours. Blaine'smanagement has decided to implement ABC because a coststudy has reve

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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