Activity Cost Pool Annual Activity 10,000 Machine hours 30,000 Material moves 15,000 Setups 25,000 Quality inspections 25,000 Orders 500 Customers Maintenance Materials Handling Setups Inspection Order processing Customer Support The company traces the costs of direct materials and direct labor to jobs (i.e. orders). Overhead costs (both manufacturing and non-manufacturing) are allocated to jobs using the activity-based costing system. These overhead costs are listed below: Indirect factory wages Other manufacturing overhead Selling and administrative expense $700,000 Total $250,000 $500,000 $1,450,000 The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools Maintenance Materials Handling Setups Inspection Order processing customer support 10% 20% 20% 25% Indirect factory wages other manufacturing overhead Sellign and administrative expense 25% 10% 10% 30% 10% 40% 0% 0% 0% 0% 0% 0% 40% 60%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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?Refer to CASE 1 (Company A): What is the activity rate for the Inspection activity cost pool
$12.20 a O
$890.00 b O
$6.00 .c O
None of the amounts given d O
Transcribed Image Text:?Refer to CASE 1 (Company A): What is the activity rate for the Inspection activity cost pool $12.20 a O $890.00 b O $6.00 .c O None of the amounts given d O
Activity Cost Pool
Maintenance
Materials Handling
Setups
Inspection
Order processing
Customer Support
Annual Activity
10,000 Machine hours
30,000 Material moves
15,000 Setups
25,000 Quality inspections
25,000 Orders
500 Customers
The company traces the costs of direct materials and direct labor to jobs (i.e. orders). Overhead costs
(both manufacturing and non-manufacturing) are allocated to jobs using the activity-based costing
system. These overhead costs are listed below:
Indirect factory wages
Other manufacturing overhead
Selling and administrative expense $700,000
Total
$250,000
$500,000
$1,450,000
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Maintenance Materials Handling Setups Inspection Order processing customer support
Indirect factory wages
other manufacturing overhead
Sellign and administrative expense
25%
25%
10%
20%
10%
10%
30%
10%
40%
20%
0%
0%
0%
0%
0%
0%
40%
60%
Transcribed Image Text:Activity Cost Pool Maintenance Materials Handling Setups Inspection Order processing Customer Support Annual Activity 10,000 Machine hours 30,000 Material moves 15,000 Setups 25,000 Quality inspections 25,000 Orders 500 Customers The company traces the costs of direct materials and direct labor to jobs (i.e. orders). Overhead costs (both manufacturing and non-manufacturing) are allocated to jobs using the activity-based costing system. These overhead costs are listed below: Indirect factory wages Other manufacturing overhead Selling and administrative expense $700,000 Total $250,000 $500,000 $1,450,000 The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools Maintenance Materials Handling Setups Inspection Order processing customer support Indirect factory wages other manufacturing overhead Sellign and administrative expense 25% 25% 10% 20% 10% 10% 30% 10% 40% 20% 0% 0% 0% 0% 0% 0% 40% 60%
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