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Determine the difference in allocation between the two approaches. Traditional $ ABC $ Difference $ Family Model s $ $ Deluxe Model

Determine the difference in allocation between the two approaches. Traditional $ ABC $ Difference $ Family Model s $ $ Deluxe Model

FINANCIAL ACCOUNTING
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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(c) Determine the difference in allocation between the two approaches. Traditional ABC Difference Save for Later $ Family Model SA $ $ Deluxe Model Attempts: 0 of 1 used Submit Answer
Transcribed Image Text:(c) Determine the difference in allocation between the two approaches. Traditional ABC Difference Save for Later $ Family Model SA $ $ Deluxe Model Attempts: 0 of 1 used Submit Answer
Current Attempt in Progress Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridan's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Direct labor costs Machine hours Setup hours Family Model $76,500 2,000 200 Deluxe Model $153,000 2,000 800 Total estimated overhead costs are $459,000. Overhead cost allocated to the machining activity cost pool is $275,400 and $183,600 is allocated to the machine setup activity cost pool.
Transcribed Image Text:Current Attempt in Progress Sheridan, Inc. produces two types of gas grills: a family model and a deluxe model. Sheridan's controller has decided to use a plantwide overhead rate based on direct labor costs. The president of the company recently heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company's operations: Direct labor costs Machine hours Setup hours Family Model $76,500 2,000 200 Deluxe Model $153,000 2,000 800 Total estimated overhead costs are $459,000. Overhead cost allocated to the machining activity cost pool is $275,400 and $183,600 is allocated to the machine setup activity cost pool.
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