7:28 W W OKOk< 1/6 >□E19-15Learning Objectives 2, 31. Total MOH Basic $256,000MaterialsHandlingOverhead costs $ 45,000Koehler (see Exercise E19-15 and Exercise E19-16 ) makes handheldcalculators in two models-basic and professional-and wants to further refineits costing system by allocating overhead using activity-based costing. Theestimated $721,000 of manufacturing overhead has been divided into threeprimary activities: Materials Handling, Machine Setup, and Insertion of Parts.The following data have been compiled:Allocation base Number ofpartsExpectedusage:CMachineSetup$ 136,000Number ofsetups1069/1480Word>BitQAAInsertion ofParts* * * * || 62%$540,000Number ofpartsTotal$721,000b° ||| 0 <:X Expectedusage:Basic ModelProfessionalModel32 parts percalculator58 parts percalculator24 setupsper year44 setupsper year32 parts percalculator58 parts percalculatorRequirement 1Koehler expects to produce 200,000 basic models and 200,000 professionalmodels. Compute the predetermined overhead allocation rates using activity-based costing. How much overhead is allocated to the basic model? To theprofessional model?Requirement 2Compare your answers for Exercise E19-15, Exercise E19-16, andExercise E19-17. What conclusions can you draw?

Activity based costing is one of the costing system under which all overhead or indirect costs are…

Requirement 1 Koehler expects to produce 200,000 basic models and 200,000 professional models. Compute the predetermined overhead allocation rates using activity- based costing. How much overhead is allocated to the basic model? To the professional model?

Requirement 1 Koehler expects to produce 200,000 basic models and 200,000 professional models. Compute the predetermined overhead allocation rates using activity- based costing. How much overhead is allocated to the basic model? To the professional model?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

7:28 W W OKOk
< 1/6 >
□
E19-15
Learning Objectives 2, 3
1. Total MOH Basic $256,000
Materials
Handling
Overhead costs $ 45,000
Koehler (see Exercise E19-15 and Exercise E19-16 ) makes handheld
calculators in two models-basic and professional-and wants to further refine
its costing system by allocating overhead using activity-based costing. The
estimated $721,000 of manufacturing overhead has been divided into three
primary activities: Materials Handling, Machine Setup, and Insertion of Parts.
The following data have been compiled:
Allocation base Number of
parts
Expected
usage:
C
Machine
Setup
$ 136,000
Number of
setups
1069/1480
Word
>Bit
QAA
Insertion of
Parts
* * * * || 62%
$540,000
Number of
parts
Total
$
721,000
b° ||| 0 <
:
X

Expected
usage:
Basic Model
Professional
Model
32 parts per
calculator
58 parts per
calculator
24 setups
per year
44 setups
per year
32 parts per
calculator
58 parts per
calculator
Requirement 1
Koehler expects to produce 200,000 basic models and 200,000 professional
models. Compute the predetermined overhead allocation rates using activity-
based costing. How much overhead is allocated to the basic model? To the
professional model?
Requirement 2
Compare your answers for Exercise E19-15, Exercise E19-16, and
Exercise E19-17. What conclusions can you draw?

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