Jackson Enterprises manufactures two products-a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three activities for allocation of indirect costs. Activity Materials receiving Production setup Quality inspection Cost Driver Number of parts Number of setups Inspection time Cost-Allocation Rate $2.00 per part $500.00 per setup $90 per hour A production run for the basic model is 250 units, for the advanced model, 100 units. Each unit of product consumes the following activities: Number of Parts 10 Basic Gizmo Advanced Gizmo O A. Direct costs for the two products are as follows: Direct Materials $50.00 $95.00 Basic Gizmo Advanced Gizmo O D. $37. B. $65. C. 15 The amount of overhead allocated to one unit of the basic model would be $592. Number of Setups 1 setup per production run 1 setup per production run $162. Direct Labor $75.00 $125.00 Inspection Time 10 minutes 20 minutes <

Jackson Enterprises manufactures two products-a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three activities for allocation of indirect costs. Activity Materials receiving Production setup Quality inspection Cost Driver Number of parts Number of setups Inspection time Cost-Allocation Rate $2.00 per part $500.00 per setup $90 per hour A production run for the basic model is 250 units, for the advanced model, 100 units. Each unit of product consumes the following activities: Number of Parts 10 Basic Gizmo Advanced Gizmo O A. Direct costs for the two products are as follows: Direct Materials $50.00 $95.00 Basic Gizmo Advanced Gizmo O D. $37. B. $65. C. 15 The amount of overhead allocated to one unit of the basic model would be $592. Number of Setups 1 setup per production run 1 setup per production run $162. Direct Labor $75.00 $125.00 Inspection Time 10 minutes 20 minutes <

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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Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $20 per direct labor-hour $ 192 per order $ 265 per custom design $ 432 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Standard Model Custom Design Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $18 per hour. Required: 15 200 28.50 $ 1,850 $ 470 2220 34.00 $ 2,480 $ 572 Using the company's activity-based costing system,…
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