In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of Product B at a selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Direct materials Direct labor Manufacturing overhead. Cost of goods sold Product A Product B $ 436,300 $ 251,700 $ 200,000 $ 104,000 Total $ 688,000 304,000 608,000 $ 1,600,000 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity Product B 62,500 300 1 ΝΑ The company's ABC implementation team also concluded that $37,000 and $113,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. The company's activity-based costing system would report a product margin for Product A of: (Do not round your intermediate calculations.)
In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of Product B at a selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Direct materials Direct labor Manufacturing overhead. Cost of goods sold Product A Product B $ 436,300 $ 251,700 $ 200,000 $ 104,000 Total $ 688,000 304,000 608,000 $ 1,600,000 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product design (number of products) Other (organization-sustaining costs) Total manufacturing overhead cost Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity Product B 62,500 300 1 ΝΑ The company's ABC implementation team also concluded that $37,000 and $113,000 of the company's advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature. The company's activity-based costing system would report a product margin for Product A of: (Do not round your intermediate calculations.)
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter5: Process Cost Accounting—general Procedures
Section: Chapter Questions
Problem 6E: The records of Burris Inc. reflect the following data: Work in process, beginning of month2,000...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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$559,200
$528,200
$509,200
$539,200
Transcribed Image Text:COTB MC Qu. 7-71 (Algo) In its first year of operations...
In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20
per unit and 17,500 units of Product B at a selling price of $40 per unit. Additional information relating to the
company's only two products is shown below:
Direct materials
Direct labor
Manufacturing overhead
Cost of goods sold
Product A Product B
$ 436,300 $ 251,700
$ 200,000 $ 104,000
Total
$ 688,000
304,000
608,000
$ 1,600,000
The company created an activity-based costing system that allocated its manufacturing overhead costs to four
activities as follows:
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product design (number of products)
Other (organization-sustaining costs)
Total manufacturing overhead cost.
Manufacturing
Overhead
$ 213,500
157,500
120,000
117,000
$ 608,000
Product A
90,000
75
1
ΝΑ
Activity
Product B
62,500
300
1
ΝΑ
The company's ABC implementation team also concluded that $37,000 and $113,000 of the company's
advertising expenses could be directly traced to Product A and Product B, respectively. The remainder of its
selling and administrative expenses ($400,000) was organization-sustaining in nature.
The company's activity-based costing system would report a product margin for Product A of: (Do not round
your intermediate calculations.)
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