Durban Metal Products makes specialty metal parts and uses activity-based costing for internal decision-making purposes. The company has four activity cost pools as follows: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls The company's owner wants to know the cost of a customer order requiring 200 direct labor-hours, 11 hours of product testing, and 5 sales calls. Required: What is the total overhead cost assigned to this order? Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost Activity Rate $17.90 per direct labor-hour $ 351.00 per customer order $77.00 per testing hour $ 1,496.00 per sales call ABC Cost
Durban Metal Products makes specialty metal parts and uses activity-based costing for internal decision-making purposes. The company has four activity cost pools as follows: Activity Cost Pool Order size Customer orders Product testing Selling Activity Measure Number of direct labor-hours Number of customer orders Number of testing hours Number of sales calls The company's owner wants to know the cost of a customer order requiring 200 direct labor-hours, 11 hours of product testing, and 5 sales calls. Required: What is the total overhead cost assigned to this order? Activity Cost Pool Order size Customer orders Product testing Selling Total overhead cost Activity Rate $17.90 per direct labor-hour $ 351.00 per customer order $77.00 per testing hour $ 1,496.00 per sales call ABC Cost
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 12E: Activity cost pools, activity rates, and product costs using activity-based costing Caldwell Home...
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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.
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