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Concord Toys is exploring options to help reduce overhead costs especially for non-value added activities. One of the proposals is from the National Toy Association. For an additional $1 per order, this entity could perform additional safety checks that would reduce the assembly line inspection costs by $0.01 per toy. Compute the overhead cost assigned to the toddler toy line for the month of August using activity-based costing under this proposal. Overhead cost assigned $

Concord Toys is exploring options to help reduce overhead costs especially for non-value added activities. One of the proposals is from the National Toy Association. For an additional $1 per order, this entity could perform additional safety checks that would reduce the assembly line inspection costs by $0.01 per toy. Compute the overhead cost assigned to the toddler toy line for the month of August using activity-based costing under this proposal. Overhead cost assigned $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Concord Toys is exploring options to help reduce overhead costs especially for non-value added activities. One of the proposals is from the National Toy Association. For an additional $1 per order, this entity could perform additional safety checks that would reduce the assembly line inspection costs by $0.01 per toy. Compute the overhead cost assigned to the toddler toy line for the month of August using activity-based costing under this proposal. Overhead cost assigned $
Transcribed Image Text:Concord Toys is exploring options to help reduce overhead costs especially for non-value added activities. One of the proposals is from the National Toy Association. For an additional $1 per order, this entity could perform additional safety checks that would reduce the assembly line inspection costs by $0.01 per toy. Compute the overhead cost assigned to the toddler toy line for the month of August using activity-based costing under this proposal. Overhead cost assigned $
Concord Toys & Games, Inc. manufactures specialty toys. Concord uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Concord assigns its quality-control overhead costs to all products at a rate of 23% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $302,000. In response to repeated requests from its financial vice president, Concord's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Activity Cost Pools Materials Inspection Assembly Line Inspection National Toy Association Certification Cost Drivers Number of pounds Number of finished toys Retail orders Overhead Rate $0.70 per pound $0.15 per toy $2.00 per order Number of Cost Drivers Used per Activity 44,000 pounds 182,000 toys 900 orders
Transcribed Image Text:Concord Toys & Games, Inc. manufactures specialty toys. Concord uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Concord assigns its quality-control overhead costs to all products at a rate of 23% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $302,000. In response to repeated requests from its financial vice president, Concord's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Activity Cost Pools Materials Inspection Assembly Line Inspection National Toy Association Certification Cost Drivers Number of pounds Number of finished toys Retail orders Overhead Rate $0.70 per pound $0.15 per toy $2.00 per order Number of Cost Drivers Used per Activity 44,000 pounds 182,000 toys 900 orders
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(a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Traditional costing Activity-based costing Quality-Control Overhead Cost +A $ $ LA
Transcribed Image Text:(a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Traditional costing Activity-based costing Quality-Control Overhead Cost +A $ $ LA
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