**Question 4.7**Using activity-based costing, what would be the total overhead applied to order no. 159? **NOTE:** Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".[Answer box]---**Question 4.8**Generally in business, why is the activity-based costing method not favoured over the traditional overhead allocation method? Provide two reasons. Clearly indicate each reason in the following format:Reason 1: .........Reason 2: ......... ### Activity-Based Costing at Clear SolutionsClear Solutions manufactures and installs standard and custom-designed shop windows. Last year, the company incurred $2,400,000 in overhead costs with a total of 30,000 direct labor hours. After implementing activity-based costing (ABC), the company’s accountant identified the following related information:#### Activity Allocation and Overhead Costs| **Activity** | **Allocation Base** | **Proportion of Overhead Cost** ||-------------------------------|--------------------------------|---------------------------------|| Purchasing | Number of purchase orders | 20% || Material delivery and handling| Number of deliveries | 10% || Design | Hours of design time | 20% || Installation | Hours of installation time | 50% |#### Activity Levels for Standard and Custom-Made Windows| **Activity** | **Standard** | **Custom** ||-------------------------------|--------------|-------------|| Number of purchase orders | 1,000 | 1,400 || Number of deliveries | 200 | 400 || Hours of design time | 200 | 800 || Hours of installation time | 700 | 600 |### Example Order AnalysisDuring the past year, Clear Solutions accepted order no. 159 for one custom window installation. The activity requirements for this order were as follows:- Direct labor hours: 20- Number of purchase orders: 3- Number of deliveries: 2- Hours of design time: 5- Hours of installation time: 4These metrics provide a detailed breakdown of how overhead is allocated in relation to different activities within the company, allowing for a more accurate computation of product costs. This information aids in understanding how specific activities contribute to overall costs and enables better decision-making in cost management.

Name: **Question 4.7**Using activity-based costing, what would be the total
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Description: **Question 4.7**Using activity-based costing, what would be the total overhead applied to order no. 159? **NOTE:** Enter only the number of dollars, do not enter the dollar, "$", symbol. Therefore if your answer is "$10", enter only "10".[Answer bo

Business

Accounting

Clear Solutions manufactures and installs standard and custom-designed shop windows. Last ye the company incurred $2,400,000 in overhead costs when a total of 30,000 direct labour hours incurred. After implementing activity-based costing (ABC), the company's accountant identified following related information: Allocation Base Activity Proportion of overhead cost Number of Purchasing purchase 20% orders Material delivery and handling Number of 10% deliveries Hours of design time Design 20% Hours of Installation installation 50% time The number of activities for standard and custom-made windows is as follows: Standard Custom Number of purchase orders Number of deliveries Hours of design time Hours of installation time 1,000 1,400 200 400 200 800 700 600 Puring the past year, Clear Solutions accepted order no. 159 for one custom window installation nat would require the following: irect labour hours umber of purchase orders umber of deliveries purs of design time -urs of installation time 20 4

Clear Solutions manufactures and installs standard and custom-designed shop windows. Last ye the company incurred $2,400,000 in overhead costs when a total of 30,000 direct labour hours incurred. After implementing activity-based costing (ABC), the company's accountant identified following related information: Allocation Base Activity Proportion of overhead cost Number of Purchasing purchase 20% orders Material delivery and handling Number of 10% deliveries Hours of design time Design 20% Hours of Installation installation 50% time The number of activities for standard and custom-made windows is as follows: Standard Custom Number of purchase orders Number of deliveries Hours of design time Hours of installation time 1,000 1,400 200 400 200 800 700 600 Puring the past year, Clear Solutions accepted order no. 159 for one custom window installation nat would require the following: irect labour hours umber of purchase orders umber of deliveries purs of design time -urs of installation time 20 4

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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