Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.RegularDeluxeTotalUnits produced80,000240,000Prime costs$7,200,000$28,800,000$36,000,000Machine hours80,000400,000480,000Engineering hours2001,8002,000Receiving orders3009001,200Inspection hours9001,8002,700Overhead costs:Machining$5,760,000Engineering800,000Receiving396,000Inspecting products459,000Required:1. Calculate the four activity rates.Machining rateS12per machine hourEngineering rateS400per hour

1) Under Activity Based Costing, various activities occurring are identified and activity rate is…

Answered: Davis Company produces two hair dryers:…

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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Martay Creations produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, respectively. Information about each department is provided in the following table: Department Total Cost Number of Employees Machine Hours Square Feet Maintenance Department $2,200 5 40 600 Security Department 4,500 3 0 500 Cutting Department 21,200 21 3,600 2,400 Sewing Department 24,900 19 5,400 3,000 Using the sequential method and allocating the support department with the highest costs first, allocate all support department costs to the production departments. Then compute the total cost of each production department. Line Item Description CuttingDepartment SewingDepartment…
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