Foundational 7-12 (Algo) 12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z? Note: Round intermediate calculations and your "Percentage" answers to 2 decimal places.
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.
Hickory Company manufactures two products—13,000 units of Product Y and 5,000 units of Product Z. The company uses a plantwide
| Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity | |
|---|---|---|---|---|
| Machining | Machine-hours | $ 246,000 | 12,000 | MHs |
| Machine setups | Number of setups | $ 137,500 | 250 | setups |
| Product design | Number of products | $ 89,000 | 2 | products |
| General factory | Direct labor-hours | $ 357,000 | 14,400 | DLHs |
| Activity Measure | Product Y | Product Z |
|---|---|---|
| Machine-hours | 7,500 | 4,500 |
| Number of setups | 40 | 210 |
| Number of products | 1 | 1 |
| Direct labor-hours | 8,500 | 5,900 |
Foundational 7-12 (Algo)
12. Using the ABC system, what percentage of the Machining costs is assigned to Product Y and Product Z?
Note: Round intermediate calculations and your "Percentage" answers to 2 decimal places.
ACTIVITY BASED COSTING
Activity Based Costing is a powerful tool for measuring performance.
Activity-Based Costing (ABC) is used to identify, describe, assign costs to, and report on agency operations.
ABC systems calculate the costs of individual activities and assign costs to cost objects such as products and services on the basis of the activities undertaken to produce each product or service.
Step by step
Solved in 3 steps
