In Class Assignment 1 AlSaleh has assigned overhead on a plantwide basis to its two products (Tables and Chairs) using direct labor hours which are estimated to be 200,000 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are Ordering and receiving (cost driver is Purchase orders) and machine setup (cost driver is number of setups). Overhead allocated to the ordering and receiving cost pool is $200,000, and $800,000 is allocated to the machine setup cost pool. Additional information related to these pools is as follows: Cost Drivers Tables Chairs Purchase orders 30,000 10,000 number of setups 10,000 30,000 a. Determine the amount of overhead assigned to the table product line and the chairs product line using activity-based costing. b. What amount of overhead would be assigned to the tables and chairs product lines using the traditional approach, assuming direct labor hours were incurred as follow: 80% for the tables and 20% for the chairs.
In Class Assignment 1 AlSaleh has assigned overhead on a plantwide basis to its two products (Tables and Chairs) using direct labor hours which are estimated to be 200,000 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are Ordering and receiving (cost driver is Purchase orders) and machine setup (cost driver is number of setups). Overhead allocated to the ordering and receiving cost pool is $200,000, and $800,000 is allocated to the machine setup cost pool. Additional information related to these pools is as follows: Cost Drivers Tables Chairs Purchase orders 30,000 10,000 number of setups 10,000 30,000 a. Determine the amount of overhead assigned to the table product line and the chairs product line using activity-based costing. b. What amount of overhead would be assigned to the tables and chairs product lines using the traditional approach, assuming direct labor hours were incurred as follow: 80% for the tables and 20% for the chairs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:In Class Assignment 1
AlSaleh has assigned overhead on a plantwide basis to its two products (Tables and Chairs) using
direct labor hours which are estimated to be 200,000 for the current year. The company has decided
to experiment with activity-based costing and has created two activity cost pools and related
activity cost drivers. These two cost pools are Ordering and receiving (cost driver is Purchase
orders) and machine setup (cost driver is number of setups). Overhead allocated to the ordering
and receiving cost pool is $200,000, and $800,000 is allocated to the machine setup cost pool.
Additional information related to these pools is as follows:
Cost Drivers
Tables
Chairs
Purchase orders
30,000
10,000
number of setups
10,000
30,000
a. Determine the amount of overhead assigned to the table product line and the chairs product
line using activity-based costing.
b. What amount of overhead would be assigned to the tables and chairs product lines using
the traditional approach, assuming direct labor hours were incurred as follow:
80% for the tables and 20% for the chairs.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education