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Question 11 Parker Systems produces two different products (Product 1 and Product 2), is considering whether to use ABC versus Traditional costing. For ABC costing Parker would use three different activities to allocate manufacturing overhead: Design, which uses Engineering Hours as an activity driver, Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. If Parker used traditional costing, they would use machine hours to allocate the cost. The cost of each activity and usage of the activity drivers are as follows. Total estimated cost $112,000 $185,000 $60,000 Activity/ (Driver) Design (engineering hours) Machining (machine hours) Inspection (Batches) Usage by Product 1 170 Usage by Product 2 270 1,790 70 1,250 80 Using traditional costing, what is the total manufacturing overhead that will be allocated to Product 27

Question 11 Parker Systems produces two different products (Product 1 and Product 2), is considering whether to use ABC versus Traditional costing. For ABC costing Parker would use three different activities to allocate manufacturing overhead: Design, which uses Engineering Hours as an activity driver, Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. If Parker used traditional costing, they would use machine hours to allocate the cost. The cost of each activity and usage of the activity drivers are as follows. Total estimated cost $112,000 $185,000 $60,000 Activity/ (Driver) Design (engineering hours) Machining (machine hours) Inspection (Batches) Usage by Product 1 170 Usage by Product 2 270 1,790 70 1,250 80 Using traditional costing, what is the total manufacturing overhead that will be allocated to Product 27

FINANCIAL ACCOUNTING
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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Question 11 Parker Systems produces two different products (Product 1 and Product 2), is considering whether to use ABC versus Traditional costing. For ABC costing Parker would use three different activities to allocate manufacturing overhead: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. If Parker used traditional costing, they would use machine hours to allocate the cost. The cost of each activity and usage of the activity drivers are as follows: Total estimated cost Activity/ (Driver) Design (engineering hours) Machining (machine hours) Inspection (Batches) Usage by Product 1 170 1,790 70 Usage by Product 2 270 1.250 80 $112,000 $185,000 $60,000 Using traditional costing, what is the total manufacturing overhead that will be allocated to Product 2?
Transcribed Image Text:Question 11 Parker Systems produces two different products (Product 1 and Product 2), is considering whether to use ABC versus Traditional costing. For ABC costing Parker would use three different activities to allocate manufacturing overhead: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. If Parker used traditional costing, they would use machine hours to allocate the cost. The cost of each activity and usage of the activity drivers are as follows: Total estimated cost Activity/ (Driver) Design (engineering hours) Machining (machine hours) Inspection (Batches) Usage by Product 1 170 1,790 70 Usage by Product 2 270 1.250 80 $112,000 $185,000 $60,000 Using traditional costing, what is the total manufacturing overhead that will be allocated to Product 2?
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