Musich Corporation has an activity-based costing system with three activity cost pools-Machining. Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Equipment depreciation Indirect labor Total Product 13 Product Ti Total Sales (total) Direct materials (total) Direct labor (total) Activity Cost Poola Setting Up $ 53,200 3,800 $ 57,000 Machining $ 11,200 7,200 $ 10,400 Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below: Kita 6,900 7,100 14,000 Batches 1,200 1,800 3,000 Other $ 25,600 5,000 $ 30,600 Product 13 $248,800 $88,500 $ 111,000 Total $90,000 16,000 $ 106,000 Product 1 $ 264,500 $ 99,400 $ 109,700 a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing.
Musich Corporation has an activity-based costing system with three activity cost pools-Machining. Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Equipment depreciation Indirect labor Total Product 13 Product Ti Total Sales (total) Direct materials (total) Direct labor (total) Activity Cost Poola Setting Up $ 53,200 3,800 $ 57,000 Machining $ 11,200 7,200 $ 10,400 Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below: Kita 6,900 7,100 14,000 Batches 1,200 1,800 3,000 Other $ 25,600 5,000 $ 30,600 Product 13 $248,800 $88,500 $ 111,000 Total $90,000 16,000 $ 106,000 Product 1 $ 264,500 $ 99,400 $ 109,700 a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Musich Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and Other. The
company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already
and are provided in the table below.
Equipment depreciation
Indirect labor
Total
Product 13
Product Ti
Total
Sales (total)
Direct materials (total)
Direct labor (total)
Activity Cost Pools
Setting Up
$ 53,200
3,800
$ 57,000
Machining.
$11,200
7,200
$ 18,400
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are
assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the
two products and the company's costs appear below:
MILA
6,900
7,100
14,000
Batches
1,200
1.800
3,000
Other
$ 25,600
5,000
$ 30,600
Product 3
$248,800
$88,500
$111,000
Total
$90,000
16,000
$ 106,000
Product 1
$264,500
$ 99,400
$ 109,700
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
c. Determine the product margins for each product using activity-based costing.
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