### EA10**LO 6.3 Custom's** has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are:**Cost Pool Table:**| Cost Pool | Cost Driver | Estimated Activity per Driver | Estimated Overhead ||--------------|----------------------|-------------------------------|--------------------|| Material | Material requisitions| 14,000 | $52,500 || Machining | Machine hours | 186,400 | $363,500 || Inspection | Number of inspections| 10,000 | $75,000 |**What is the predetermined overhead rate for each activity?**Note: This table provides an overview of the different cost pools within a manufacturing process, identifying their respective cost drivers, the estimated activity levels associated with each driver, and the estimated overhead costs tied to each pool. Understanding these allocations is critical for accurate financial planning and cost management in manufacturing operations.---To calculate the predetermined overhead rate for each activity, divide the estimated overhead by the estimated activity per driver for each cost pool. This provides a measure of the overhead costs allocated per unit of activity, which is essential for accurate budgeting and financial analysis in manufacturing scenarios.

Predetermined overhead rate is used to calculate the estimated overhead. It shows the rate at which…

EA10. LO 6.3Custom's has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: Estimated gverhead $ 52,500 363,500 75,000 Estimated Activity per Driver Cost Pool Cost Driver Material requisitions Machine hours Number of inspections 14,000 186,400 10,000 Material Machining Inspection What is the predetermined overhead rate for each activity?

EA10. LO 6.3Custom's has three cost pools and an associated cost driver to allocate the costs to the product. The cost pools, cost driver, estimated overhead, and estimated activity for the cost pool are: Estimated gverhead $ 52,500 363,500 75,000 Estimated Activity per Driver Cost Pool Cost Driver Material requisitions Machine hours Number of inspections 14,000 186,400 10,000 Material Machining Inspection What is the predetermined overhead rate for each activity?

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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3 2. An intern suggested that the company use activity-based costing to cost its products. A team was formed to investigate this idea, and it came back with the recommendation that four activity cost pools be used. These cost pools and their associated activities follow: 5 ints 00:40:40 Activity Cost Pool and Activity Measure Purchase orders (number of orders) Rework requests (number of requests) Product testing (number of tests) Machine related (machine-hours) Activity Cost Pool Purchase orders Rework requests Product testing Machine related Estimated Overhead Cost $ 170,000 374,400 350,000 1,150,000 $2,044,400 Compute the activity rate (i.e., predetermined overhead rate) for each of the activity cost pools. Activity Rate per order per request per test per MH Deluxe 1,000 600 5,000 18,000 Activity Regular 1,500 1,200 12,500 28,000 Total 2,500 1,800 17,500 46,000 3. Assume that actual activity is as expected for the year. Using activity-based costing, do the following: a. Determine the…
Please Answer part 4. Part 1-3 answers Part 1 Computation of Cost Allocation Rate for each activity: Activity Costs Base usage Allocation rate Material Handling 160,000 20,000 8 Packaging 390,000 2,000 195 Quality Assurance 112,000 1,600 70 Total 662,000 Part 2 Activity Usage of All Activities: Activity Commercial Travel Total Material Handling 8700 4450 13,150 Packaging 900 300 1,200 Quality Assurance 270 370 640 Allocation of Cost basis Usage: Activity Commercial Travel Material Handling 69,600 35600 (Activity Usage * Cost Allocation Rate) (8,700 * 8) (4450 * 8) Packaging 175,500 58500 Quality Assurance 18,900 25900 Total 264,000 120000 Units Produced 3,000 20000 Cost Per Unit 88 6 Part 3 Particulars Commercial Travel Usage of…
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Station 9 ¾ Corporation manufacturers railroad tracks. They are currently using a traditional system, with machine hours as the cost driver. They are considering converting to an ABC system, and want a comparison of the two. Station 9 ¾ has identified the following activity information: Activity Cost Driver Est. Cost Driver Volume Est. Cost Pool Machining Machine Hours 12,000 $119,000 Assembly Direct Labor Hours 15,800 $107,000 Setup Number of Setups 9 $24,300 Total $250,300 The actual cost driver volume that occurred during the production process is below: Machine Hours 8,600 Direct Labor Hours 9,700 Number of Setups 7 What is the Difference between traditional and ABC system?
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