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Question No.6 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers.     Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000   Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system.

Question No.6 Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers.     Product Number of Orders Number of Set-ups Number of Labor Transactions Labor Hours XX YY Cost per pool 60 20 Rs.16,000 20 80 Rs.13,000 50 70 Rs.2,400 2,000 500 Rs.20,000   Required: Compute the allocation rates for each of the activity drivers listed. Allocate the overhead costs to product XX and product YY using activity-based costing. Compute the overhead rate using machine hours under the functional-based costing system.

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 No.6

Hunter Company manufactures two products (XX and YY). The overhead costs have been divided into four cost pools that use the following activity drivers.

 

 

Product

Number of Orders

Number of Set-ups

Number of Labor Transactions

Labor Hours

XX

YY

Cost per pool

60

20

Rs.16,000

20

80

Rs.13,000

50

70

Rs.2,400

2,000

500

Rs.20,000

 

Required:

  1. Compute the allocation rates for each of the activity drivers listed.
  2. Allocate the overhead costs to product XX and product YY using activity-based costing.
  3. Compute the overhead rate using machine hours under the functional-based costing system.

Allocate the overhead cost to Product XX and YY using the functional-based costing system overhead rate calculated in part C.

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