Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Production Setup Materials handling Inspection Product engineering Total Activity Production The activity bases identified for each activity are as follows: Setup Materials handling Inspection Product engineering Alpha Beta Omega The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Number of Number of Number of Inspection Setups Parts Hours 400 300 500 1,200 Machine Hours 1,440 1,080 Total Activity Cost Pool $259,200 55,000 9,750 60,000 Machine hours Number of setups Number of parts Number of inspection hours Number of engineering hours 75 Activity Base 65 80 720 180 3,240 325 Each product requires 40 minutes per unit of machine time. 123,200 $507,150 165 310 550 Number of Engineering Hours Units 1,800 1,350 900 4,050 125 175 140 440
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows: Activity Production Setup Materials handling Inspection Product engineering Total Activity Production The activity bases identified for each activity are as follows: Setup Materials handling Inspection Product engineering Alpha Beta Omega The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Number of Number of Number of Inspection Setups Parts Hours 400 300 500 1,200 Machine Hours 1,440 1,080 Total Activity Cost Pool $259,200 55,000 9,750 60,000 Machine hours Number of setups Number of parts Number of inspection hours Number of engineering hours 75 Activity Base 65 80 720 180 3,240 325 Each product requires 40 minutes per unit of machine time. 123,200 $507,150 165 310 550 Number of Engineering Hours Units 1,800 1,350 900 4,050 125 175 140 440
Chapter1: Financial Statements And Business Decisions
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