Sunland, Inc. decided to implement the activity-based costing approach and was quite successful in its use. However, the controller is wondering if instead of only two activity cost pools, they should expand to three activity cost pools based on the following: Direct labor costs Machine hours Setup hours Packaging hours. Question 1 of 20 Machining Family Model $77,400 Machine set up Packaging The estimated overhead of $464,400 is allocated as follows: machining activity cost pool $247,680, machine set up $175,440 and packaging $41,280. Deluxe model $ 2,000 (1) Determine the overhead rates using the activity-based costing approach with three cost pools. (Round answers to 2 decimal places, eg. 15.25.) Difference Family model $ $ $ $ The additional cost pool 200 $ 50 < Deluxe Model $154,800 > 2,000 800 75 (2) Calculate the overhead allocation for the family model and the deluxe model using three activity cost pools. Overhead Rate per hour Overhead Allocation per hour What is the difference in allocation between two activity cost pools and three activity cost pools? Is the difference in allocation worth using the third activity cost pool? per hour the overhead cost allocation significantly.

Sunland, Inc. decided to implement the activity-based costing approach and was quite successful in its use. However, the controller is wondering if instead of only two activity cost pools, they should expand to three activity cost pools based on the following: Direct labor costs Machine hours Setup hours Packaging hours. Question 1 of 20 Machining Family Model $77,400 Machine set up Packaging The estimated overhead of $464,400 is allocated as follows: machining activity cost pool $247,680, machine set up $175,440 and packaging $41,280. Deluxe model $ 2,000 (1) Determine the overhead rates using the activity-based costing approach with three cost pools. (Round answers to 2 decimal places, eg. 15.25.) Difference Family model $ $ $ $ The additional cost pool 200 $ 50 < Deluxe Model $154,800 > 2,000 800 75 (2) Calculate the overhead allocation for the family model and the deluxe model using three activity cost pools. Overhead Rate per hour Overhead Allocation per hour What is the difference in allocation between two activity cost pools and three activity cost pools? Is the difference in allocation worth using the third activity cost pool? per hour the overhead cost allocation significantly.

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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