חטeticUוyd-pוttioד DZJ,000.00 2 Indirect labor 64,720.00 3 Factory electricity 6,472.00 4 Indirect materials 25,020.00 5 Selling expenses 24,100.00 6 Administrative expenses 15,600.00 Total costs $161,800.00 tory overhead is allocated to the three products on the basis of processing hours. The Budgeted Volume (Cases) Processing Hours per Case Tortilla chips 4,000 0.15 Potato chips 4,700 0.12 Pretzels 2,400 0.44 Total 11,100

חטeticUוyd-pוttioד DZJ,000.00 2 Indirect labor 64,720.00 3 Factory electricity 6,472.00 4 Indirect materials 25,020.00 5 Selling expenses 24,100.00 6 Administrative expenses 15,600.00 Total costs $161,800.00 tory overhead is allocated to the three products on the basis of processing hours. The Budgeted Volume (Cases) Processing Hours per Case Tortilla chips 4,000 0.15 Potato chips 4,700 0.12 Pretzels 2,400 0.44 Total 11,100

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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Accounting Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging Using the following information, determine the overhead rates and the actual cost assigned for each of the…
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