Assume a company manufactures only two products-14,000 units of Product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Product A 9,000 50 1 Estimated Overhead Cost Product B 6,000 150 1 $ 300,000 $ 150,000 $ 78,000 Expected Activity 15,000 MH 200 Setups Activity Measure Machine-hours Number of setups Number of products Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product A? 2 Products

Assume a company manufactures only two products-14,000 units of Product A and 6,000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Product A 9,000 50 1 Estimated Overhead Cost Product B 6,000 150 1 $ 300,000 $ 150,000 $ 78,000 Expected Activity 15,000 MH 200 Setups Activity Measure Machine-hours Number of setups Number of products Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product A? 2 Products

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 37P: Refer to the data given in Problem 4.36 and suppose that the expected activity costs are reported as...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

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COTB MC Qu. 7-44 (Static) Assume a company manufactures only two...
Assume a company manufactures only two products-14,000 units of Product A and 6.000 units of Product B. It is considering implementing an activity-based costing (ABC) system that allocates all of its
manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B
Activity Cost Pool
Machining
Machine setups
Product design
Activity Measure
Machine-hours
Number of setups
Number of products
Product A
9,000
50
1
Product B
6,000
150
Estimated
Overhead
Cost
1
$ 300,000
$ 150,000
$ 78,000
Activity Measure
Machine-hours
Number of setups
Number of products
Using the ABC system, how much total overhead cost would be assigned from all of the activities to Product A?
Expected Activity
15,000 MH
200 Setups
2 Products

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