Arrojo Corporation manufactures two products: Product X718 and Product C911. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X71B and C911. Activity Cost Pool Activity Measure Machining Machine-hours Machine setups Product design Order size Activity Measure Machine-hours Total Cost Total Activity $ 275,000 11,000 Machine-hours Number of setups $ 210,000 350 setups Number of products $ 48,000 2 products O $416,500 Direct labor-hours $ 300,000 10,000 Direct labor-hours Product X71B Product C911 5,000 6,000 220 130 1 4,000 Number of setups Number of products 1 Direct labor-hours 6,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product X71B?
Arrojo Corporation manufactures two products: Product X718 and Product C911. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X71B and C911. Activity Cost Pool Activity Measure Machining Machine-hours Machine setups Product design Order size Activity Measure Machine-hours Total Cost Total Activity $ 275,000 11,000 Machine-hours Number of setups $ 210,000 350 setups Number of products $ 48,000 2 products O $416,500 Direct labor-hours $ 300,000 10,000 Direct labor-hours Product X71B Product C911 5,000 6,000 220 130 1 4,000 Number of setups Number of products 1 Direct labor-hours 6,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product X71B?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Arrojo Corporation manufactures two products: Product X718 and Product C911. The company uses a plantwide overhead rate
based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its
manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for
Products X71B and C911.
Activity Cost Pool Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$275,000 11,000 Machine-hours
Number of setups
$ 210,000 350 setups
Number of products $ 48,000 2 products
Direct labor-hours $ 300,000 10,000 Direct labor-hours
Product X71B Product C911
5,000
6,000
220
130
1
Machine setups
Product design
Order size
Activity Measure
Machine-hours
Number of setups
Number of products 1
Direct labor-hours 6,000
4,000
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product X71B?
O$416,500
Transcribed Image Text:Arrojo Corporation manufactures two products Product X718 and Product C911 The company uses a plantwide overhead rate
based on direct labor-hours. It is considering implementing an activity-based conting (ABC) system that affocates its
manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for
Products X71B and C911.
Activity Cost Pool Activity Measure
Machining
Machine-hours
Machine setups
Product design
Order size
Number of setups
Number of products $ 48,000 2 products
Activity Measure
Machine-hours
Number of setups
Number of products 1
Direct labor-hours
O $416,500
O $499,800
$372,000
Total Cost
Total Activity
$275,000 11,000 Machine-hours
$ 210,000 350 setups
O $333,200
Direct labor-hours
Product X71B Product C911
5,000
6,000
220
130
1
6,000
$ 300,000 10,000 Direct labor-hours
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product X71B?
4,000
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