Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. 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 Multiple Choice OOO O $364,400. $344,400. $314,400. Activity Measure Machine-hours Using the company's plantwide approach, the total overhead cost allocated to Product A is closest to: $384,400. Number of setups Number of products Product A 9,000 50 1 Product B 6,000 150 1 Estimated Overhead Cost Expected Activity $300,000 15,000 MH $150,000 $ 80,000 200 Setups 2 Products
Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on direct labor dollars. 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 Multiple Choice OOO O $364,400. $344,400. $314,400. Activity Measure Machine-hours Using the company's plantwide approach, the total overhead cost allocated to Product A is closest to: $384,400. Number of setups Number of products Product A 9,000 50 1 Product B 6,000 150 1 Estimated Overhead Cost Expected Activity $300,000 15,000 MH $150,000 $ 80,000 200 Setups 2 Products
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assume a company produces and sells only two products-14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct
materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $15, respectively. The company uses a plantwide overhead rate based on
direct labor dollars. 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
Multiple Choice
OOO O
$364,400.
$344,400.
$314,400.
Activity Measure
Machine-hours
Using the company's plantwide approach, the total overhead cost allocated to Product A is closest to:
$384,400.
Number of setups
Number of products
Product A
9,000
50
1
Product B
6,000
150
1
Estimated
Overhead Cost Expected Activity
$300,000
15,000 MH
$150,000
$ 80,000
200 Setups
2 Products
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