Susan is the controller for Simply Devine Inc., a company that produces ice cream and specializes in dairy-free versions of the Cookie Dough and Rocky Road flavors. Susan has recommended that Simply Devine implement Activity-Based Costing (ABC) as they gear up to produce the following number of pints in the coming year: Cookie Dough, 98,700 pints; and Rocky Road, 88,430 pints. Susan believes that a traditional costing system has not been the most effective manner to allocate their Manufacturing Overhead (MOH) costs. She has compiled the following data about the usage of their company resources: Item Pounds of Ingredients Moved Cleaning/ Maintenance Hours # of Inspections Supervisor Hours Cookie Dough 5,000 3,850 6,100 2,005 Rocky Road 3,900 2,570 3,600 2,335 Their MOH is comprised of the following costs: Moving and Sorting Ingredients $76,500 (8,900 pounds) Cleaning and Maintenance $48,200 (6,420 hours) Quality Control $26,550 (9,700 inspections) Supervisor Wages $107,430 (4,340 hours) What is
Susan is the controller for Simply Devine Inc., a company that produces ice cream and specializes in dairy-free versions of the Cookie Dough and Rocky Road flavors. Susan has recommended that Simply Devine implement Activity-Based Costing (ABC) as they gear up to produce the following number of pints in the coming year: Cookie Dough, 98,700 pints; and Rocky Road, 88,430 pints. Susan believes that a traditional costing system has not been the most effective manner to allocate their Manufacturing Overhead (MOH) costs. She has compiled the following data about the usage of their company resources: Item Pounds of Ingredients Moved Cleaning/ Maintenance Hours # of Inspections Supervisor Hours Cookie Dough 5,000 3,850 6,100 2,005 Rocky Road 3,900 2,570 3,600 2,335 Their MOH is comprised of the following costs: Moving and Sorting Ingredients $76,500 (8,900 pounds) Cleaning and Maintenance $48,200 (6,420 hours) Quality Control $26,550 (9,700 inspections) Supervisor Wages $107,430 (4,340 hours) What is
Chapter1: Financial Statements And Business Decisions
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14. Susan is the controller for Simply Devine Inc., a company that produces ice cream and specializes in dairy-free versions of the Cookie Dough and Rocky Road flavors. Susan has recommended that Simply Devine implement Activity-Based Costing (ABC) as they gear up to produce the following number of pints in the coming year: Cookie Dough, 98,700 pints; and Rocky Road, 88,430 pints. Susan believes that a traditional costing system has not been the most effective manner to allocate their Manufacturing Overhead (MOH) costs. She has compiled the following data about the usage of their company resources:
Item Pounds of Ingredients Moved Cleaning/
Maintenance Hours # of Inspections Supervisor Hours
Cookie Dough 5,000 3,850 6,100 2,005
Rocky Road 3,900 2,570 3,600 2,335
Their MOH is comprised of the following costs:
Moving and Sorting Ingredients $76,500 (8,900 pounds)
Cleaning and Maintenance $48,200 (6,420 hours)
Quality Control $26,550 (9,700 inspections)
Supervisor Wages $107,430 (4,340 hours)
What is the ABC-based total MOH cost allocated per unit for Cookie Dough ice cream? (If required, round calculations to two decimal places.)
A) $0.74
B) $1.40
C) $1.41
D) $1.56
Hint: This question requires calculation of the activity rate for each of the MOH activities
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