Compute the indirect manufacturing costs allocated to each product using activity based costing. Q QBIU SAY田。三 ▼Arial12f*AD3536 2. ABC Corp uses an Activity Based Costing system. The accountants at ABC have identified three majoractivities and their related cost drivers. ABC manufactures Hats, Coats and Mittens.3738Cost Driver39 Activity40 Materials ProcessingDirect Materials Cost41 Machine Main tenanceMaintenance Hours42 MeasurementWeighing of Goods4344Direct Costs for Each Product for this month are as follows:OtherCost DriverDirect Materials CostMaintenance Hours(in $)48 Weighing of Goods45HatsCoatsMittens5%24%11%4635%30%30%24%20%32%4735%28%26%49Indirect Costs for the month is as follows:5051$38,00052 Materials ProcessingMachine Maintenance54 MeasurementTotal$25,00053$23,000$86,000555657 Required:TestSheet

Activity based costing is a costing system in which indirect costs or overheads are allocated to…

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Business

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Compute the indirect manufacturing costs allocated to each product using activity based costing.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Compute the indirect manufacturing costs allocated to each product using activity based costing.

Q Q
BIU SAY
田。
三 ▼
Arial
12
f*
A
D
35
36 2. ABC Corp uses an Activity Based Costing system. The accountants at ABC have identified three major
activities and their related cost drivers. ABC manufactures Hats, Coats and Mittens.
37
38
Cost Driver
39 Activity
40 Materials Processing
Direct Materials Cost
41 Machine Main tenance
Maintenance Hours
42 Measurement
Weighing of Goods
43
44
Direct Costs for Each Product for this month are as follows:
Other
Cost Driver
Direct Materials Cost
Maintenance Hours(in $)
48 Weighing of Goods
45
Hats
Coats
Mittens
5%
24%
11%
46
35%
30%
30%
24%
20%
32%
47
35%
28%
26%
49
Indirect Costs for the month is as follows:
50
51
$38,000
52 Materials Processing
Machine Maintenance
54 Measurement
Total
$25,000
53
$23,000
$86,000
55
56
57 Required:
Test
Sheet

Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.

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