Question

1.Abbe Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,600 units and of Product B is 950 units. There are three activity cost pools, with estimated costs and expected activity as follows:

Activity Cost Pools	Estimated Overhead Cost			Expected Activity
				Product A	Product B	Total
Activity 1	$	38,241		1,100	1,000	2,100
Activity 2	$	58,551		2,100	800	2,900
Activity 3	$	72,702		640	620	1,260

The overhead cost per unit of Product B is closest to:

2.

Ravelo Corporation has provided the following data from its activity-based costing system:

Activity Cost Pools	Estimated Overhead Cost		Expected Activity
Assembly	$	518,520	54,000	machine-hours
Processing orders	$	64,263	2,100	orders
Inspection	$	87,589	2,110	inspection-hours

Data concerning the company's product L19B appear below:

Annual unit production and sales		630
Annual machine-hours		1,190
Annual number of orders		270
Annual inspection hours		220
Direct materials cost	$	57.74	per unit
Direct labor cost	$	30.45	per unit

According to the activity-based costing system, the unit product cost of product L19B is closest to:

3.

Time Remaining 2 hours 58 minutes 31 seconds

02:58:31

Item 3

Item 3

Time Remaining 2 hours 58 minutes 31 seconds

02:58:31

Archie Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.

Activity Cost Pools	Activity Rate
Setting up batches	$	77.01		per batch
Processing customer orders	$	57.65		per customer order
Assembling products	$	1.48		per assembly hour

Last year, Product X26X required 35 batches, 1 customer order, and 370 assembly hours.

Required:

How much overhead cost would be assigned to Product X26X using the company's activity-based costing system?

4.

Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system:

Activity Cost Pools (and Activity Measures)	Estimated Overhead Cost
Machine related (machine-hours)	$	250,640
Batch setup (setups)	$	252,480
Order size (direct labor-hours)	$	172,020

	Expected Activity
Activity Cost Pools	Product X	Product Y	Total
Machine related	4,200	6,200	10,400
Batch setup	8,400	1,200	9,600
Order size	3,200	6,200	9,400

Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

Answer 1

1) Determination of Activity rates for each activity :- Estimated Estimated Activity Rate Activity Cost Pool Overhead Cost driver Activity 1 38,241 2,100 18.21 Activity 2 58,551 2,900 20.19 Activity 3 72,702 1,260 57.70 Amount of overhead cost assigned to Product B :- Overhead Product B Activity Cost Pool Activity Rate allocated to Cost driver Product B Activity 1 18,210 18.2100 1,000 Activity 2 20.1900 800 16,152 Activity 3 35,774 57.7000 620 Total Overhead assigned 70,136 Overhead cost per unit of Product B = (70136/950) Overhead cost per unit of Product B = $ 73.83/. 2) Determination of Activity rates for each activity :- Estimated Estimated Activity Cost Pool Activity Rate Cost driver Overhead Assembly 518,520 54,000 9.60 Processing orders 64,263 2,100 30.60 Inspection 87,589 2,110 41.51 Unit product cost of product L19B :- Particulars Amount $ Amount $ Direct materials cost (I) 57.74 Direct labor cost (II) 30.45 Overhead Per unit :- Assembly (1190*9.60) 11,426.64 Processing orders (30.60*270) 8,262.39 Inspection (41.51*220) 9,132.50 Total overhead 28,821.53 No of units 630.00 Overhead per unit is (III) 45.75 Unit product cost of product L19B 133.94

3) Overhead cost would be assigned to Product X26X :- Estimated Overhead Activity Cost Pool Activity Rate Cost driver Assigned Setting up batches 2,695.35 35 77.01 57.65 Processing customer orders 57.65 Assembling products 547.60 370 1.48 Overhead assigned 3,300.60 4) Determination of Activity rates for each activity :- Estimated Estimated Activity Cost Pool Activity Rate Overhead Cost driver Machine related (machine-hours) 24.10 250,640 10,400 Batch setup (setups) 26.30 252,480 9,600 Order size (direct labor-hours) 172,020 9,400 18.30 Overhead cost would be assigned to Product X :- Estimated Overhead Activity Cost Pool Activity Rate Cost driver Assigned Machine related (machine-hours) 24.10 4,200 101,220 Batch setup (setups) 8,400 26.30 220,920 Order size (direct labor-hours) 18.30 3,200 58,560 Overhead assigned 380,700