Dickerson Company, which uses an activity-based costing system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic data: Travel trailers Boat trailers Budgeted units to be produced 2,250 2,900 Budgeted number of setups 340 560 Budgeted number of direct labor hours per unit 40 60 Total budgeted setup costs for the year are $158,400. If the setup costs are allocated using number of setups, how much of the total setup costs would be allocated to boat trailers? Select one: a. $104,400 b. $59,840 c. $282.86 d. $158,400 e. $98,560
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Dickerson Company, which uses an activity-based costing system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic data:
|
|
Travel trailers |
Boat trailers |
|
Budgeted units to be produced |
2,250 |
2,900 |
|
Budgeted number of setups |
340 |
560 |
|
Budgeted number of direct labor hours per unit |
40 |
60 |
Total budgeted setup costs for the year are $158,400.
If the setup costs are allocated using number of setups, how much of the total setup costs would be allocated to boat trailers?
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