Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimated overhead cost Toasters Blenders Total Setup costs $8285 245 batches 390 batches 635 batches Engineering costs $70,980 900 engineering 800 engineering hours 1700 engineering hrs Maintenance costs $70,750 2730 direct labor hours 1295 direct labor hours 4025 direct labor hours Total $2200 The overhead cost per blender using an activity-based costing system would be closest to (Round all answers to two decimal places.)
Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Estimated overhead cost Toasters Blenders Total Setup costs $8285 245 batches 390 batches 635 batches Engineering costs $70,980 900 engineering 800 engineering hours 1700 engineering hrs Maintenance costs $70,750 2730 direct labor hours 1295 direct labor hours 4025 direct labor hours Total $2200 The overhead cost per blender using an activity-based costing system would be closest to (Round all answers to two decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2200 units, while 1400 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $150,015. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools:
The overhead cost per blender using an activity-based costing system would be closest to (Round all answers to two decimal places.)
| | | Expected activity |
| Activity cost pool | Estimated overhead cost |
Toasters | Blenders | Total |
| Setup costs | $8285 | 245 batches | 390 batches | 635 batches |
| Engineering costs | $70,980 | 900 engineering | 800 engineering hours | 1700 engineering hrs |
| Maintenance costs | $70,750 | 2730 direct labor hours | 1295 direct labor hours | 4025 direct labor hours |
| Total | $2200 | | | |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education