Activity-Based Costing Quality Cuts Inc. has total estimated factory overhead for the year of $204,000, divided into four activities: cutting, $81,000; sewing, $25,500; setup, $60,000; and inspection, $37,500. Quality Cuts manufactures two types of men’s pants: jeans and khakis. The activity-base usage quantities for each product by each activity are as follows:   Cutting Sewing  Setup Inspection Jeans 500 dlh 1,000 dih 250 setups 100 inspections Khakis 1,000 500 750 400   1,500 dlh 1,500dlh 1,000 setups 500 inspections Each product is budgeted for 10,000 units of production for the year. a.  Determine the activity rates for each activity. Cutting $ per dlh Sewing $ per dlh Setup $ per setup Inspection $ per inspection b.  Determine the factory overhead cost per unit for each product, using activity-based costing. Round your answers to two decimal places. Jeans $ Khakis

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

Activity-Based Costing

Quality Cuts Inc. has total estimated factory overhead for the year of $204,000, divided into four activities: cutting, $81,000; sewing, $25,500; setup, $60,000; and inspection, $37,500. Quality Cuts manufactures two types of men’s pants: jeans and khakis. The activity-base usage quantities for each product by each activity are as follows:

  Cutting Sewing  Setup Inspection
Jeans 500 dlh 1,000 dih 250 setups 100 inspections
Khakis 1,000 500 750 400
  1,500 dlh 1,500dlh 1,000 setups 500 inspections

Each product is budgeted for 10,000 units of production for the year.

a.  Determine the activity rates for each activity.

Cutting $ per dlh
Sewing $ per dlh
Setup $ per setup
Inspection $ per inspection

b.  Determine the factory overhead cost per unit for each product, using activity-based costing. Round your answers to two decimal places.

Jeans $
Khakis
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 4 images

Blurred answer
Knowledge Booster
Performance measurements
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.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education