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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. 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 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Multiple Choice O Product A $ 436,300 $ 200,000 $637,000 $400,000 Product B $ 251,700 $ 104,000 $517,000 Total $ 688,000 304,000 608,000 $ 1,600,000 $117,000 Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity Product B The company's ABC implementation team also concluded that $50,000 and $100,000 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. 62,500 300 1 How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? ΝΑ Total 152,500 375 2 ΝΑ

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. 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 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Multiple Choice O Product A $ 436,300 $ 200,000 $637,000 $400,000 Product B $ 251,700 $ 104,000 $517,000 Total $ 688,000 304,000 608,000 $ 1,600,000 $117,000 Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity Product B The company's ABC implementation team also concluded that $50,000 and $100,000 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. 62,500 300 1 How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? ΝΑ Total 152,500 375 2 ΝΑ

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 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 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Multiple Choice O Product A $ 436,300 $ 200,000 $637,000 $400,000 Product B $ 251,700 $ 104,000 $517,000 Total $ 688,000 304,000 608,000 $ 1,600,000 $117,000 Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity The company's ABC implementation team also concluded that $50,000 and $100,000 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. Product B How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? 62,500 300 1 ΝΑ Total 152,500 375 2 ΝΑ
Transcribed Image Text: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 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 The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Multiple Choice O Product A $ 436,300 $ 200,000 $637,000 $400,000 Product B $ 251,700 $ 104,000 $517,000 Total $ 688,000 304,000 608,000 $ 1,600,000 $117,000 Manufacturing Overhead $ 213,500 157,500 120,000 117,000 $ 608,000 Product A 90,000 75 1 ΝΑ Activity The company's ABC implementation team also concluded that $50,000 and $100,000 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. Product B How much of the company's total costs that would be included in its traditional absorption costing income statement should not be assigned to Product A or Product B by the activity-based costing system that the company uses for internal management purposes? 62,500 300 1 ΝΑ Total 152,500 375 2 ΝΑ
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