Atlanta Systems produces two different products, Product A, which sells for $650 per unit, and Product B, which sells for $1,200 perunit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hoursas an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of theactivity drivers are as follows:Usage byProduct AUsage byCostProduct BDesign (Engineering Hours)Machining (Machine Hours)Inspection (Batches)$ 230,000$2,600,000$ 240,0001161342,3202,6803446Atlanta manufactures 12,500 units of Product A and 10,172 units of Product B per month. Each unit of Product A uses $100 of directmaterials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor.Required:a. Calculate the activity rate for design.Rate for Designper hourb. Calculate the activity rate for machining.Rate for Machiningper hourc. Calculate the activity rate for inspection.Rate for Inspectionper batchd. Determine the indirect costs assigned to Product A.Indirect Costs

Activity rate = Total cost for the activity / Total no. of the activities where, Total no. of the…

Atlanta Systems produces two different products, Product A, which sells for $650 per unit, and Product B, which sells for $1,200 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Usage by Product A Usage by Product B Cost Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) $ 230,000 $2,600,000 $ 240,000 116 134 2,320 34 2,680 46 Atlanta manufactures 12,500 units of Product A and 10,172 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor. Required: a. Calculate the activity rate for design. Rate for Design per hour b. Calculate the activity rate for machining. Rate for Machining per hour c. Calculate the activity rate for inspection. Rate for Inspection per batch d. Determine the indirect costs assigned to Product A. Indirect Costs

Atlanta Systems produces two different products, Product A, which sells for $650 per unit, and Product B, which sells for $1,200 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Usage by Product A Usage by Product B Cost Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) $ 230,000 $2,600,000 $ 240,000 116 134 2,320 34 2,680 46 Atlanta manufactures 12,500 units of Product A and 10,172 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor. Required: a. Calculate the activity rate for design. Rate for Design per hour b. Calculate the activity rate for machining. Rate for Machining per hour c. Calculate the activity rate for inspection. Rate for Inspection per batch d. Determine the indirect costs assigned to Product A. Indirect Costs

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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