Managerial Accounting for Managers
4th Edition
ISBN: 9781259578540
Author: Eric Noreen, Peter C. Brewer Professor, Ray H Garrison
Publisher: McGraw-Hill Education
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Chapter 6A, Problem 6A.1E
To determine
Concept introduction:
Activity-based costing is a method of allocation of
To indicate: The classification of each activity.
Expert Solution & Answer
Explanation of Solution
The classification of each activity is as follows:
| Activity # | Type | |
| a | Batch Level | Raw materials are used for a batch of the product; hence receiving the raw materials is a batch level activity. |
| b | Product level | Management of parts inventory is a product-level activity. |
| c | Unit level | Milling work on the product is done at the unit level. Hence, it is a unit-level activity. |
| d | Organization level | Hiring new employees is an organization level activity. |
| e | Organization level | Designing a new product is an organization level activity. |
| f | Organization level | Performing preventive maintenance of equipment is an organization level activity. |
| g | Organization level | The use of general factory building is an organization level activity. |
| h | Batch Level | Issuing purchase orders for a job is a batch level activity. |
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Two years ago, company scientists developed an alloy with all of the properties of the raw materials used in XL-D that generates no
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Manufacturing of both components begins in the Production Department and is completed in the Assembly Department. No other
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Units produced
Raw material costs per unit
Direct labor-hours per unit-Production
Direct labor-hours per unit-Assembly
Direct labor rate per hour-all labor
Machine-hours per unit-Production
Machine-hours per unit-Assembly
Testing hours…
Required information
[The following information applies to the questions displayed below.]
Rusties Company recently implemented an activity-based costing system. At the beginning of the
year, management made the following estimates of cost and activity in the company's five activity
cost pools:
Activity Cost Pool
Labor-related
Purchase orders
Product testing
Template etching
General factory
Activity Cost Pool
Labor-related (DLHs)
Purchase orders (orders)
Product testing (tests)
Template etching (templates)
General factory (MHs)
Activity Measure.
Direct labor-hours
Number of orders
Number of tests
Number of templates
Machine-hours
Product A
Product B
Product C
Product D
Total Overhead
Cost
Expected
Overhead
Cost
2. The expected activity for the year was distributed among the company's four products as follows:
Product A
500
60
260
0
3,900
$ 40,320
$1,650
$ 7,700
$ 1,260
$ 69,000
Expected Activity
2,240 DLHS
Expected Activity
Product B
140
120
60
28
3,200
550 orders
385 tests
45…
Please help me with show all calculation thanku
Chapter 6A Solutions
Managerial Accounting for Managers
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