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1. 2. The following overhead cost information is available for the Freaky Friday corporation for the prior year: Activity Allocation Base Overhead Cost Purchasing Number
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The following overhead cost information is available for the Freaky Friday corporation for the prior year: Activity Allocation Base Overhead Cost Purchasing Number of purchase orders $550,000 Stock Handling Number of parts $120,000 Maintenance Number of machine setups $225,000 Quality Control Number of inspections $170,000 During the year, 12000 purchase orders were issued ; 35000 parts were received ; 2400 machine setups occurred and 3400 inspections were conducted. Employees worked a total of 11, 500 hours on production. The corporate managers are trying to decide whether they should use a traditional overhead allocation based method on direct labour hours, or switch to an activity-based costing. Assume that a batch of products has the following specifications: Direct Labour Hours 7 Purchase Orders 6 Parts Received 14 Machine Setups 2 Inspections 2 Required: A) Determine the overhead allocation for the batch under the traditional overhead allocation. B) Determine the overhead allocation for the batch under activity-based costing. C) Based on the figures above, which is the best method for Freaky Friday to pursue? Johnny's Paints sells tins of three yellow paint products Bright Yellow, Light Yellow, and Mellow Yellow. The company has annual fixed costs of $450,000. Last year, the company sold 20,400 bottles of its face-wash products in the ratio of 41:3. clean skin's accounting department has compiled the following data related to the three face-wash products. Bright Yellow Light Yellow Mellow Yellow Price per tin $25.00 $20.00 $35.00 Variable cost per tin $12.00 $10.00 $18.00 Required: A) Calculate the total number of tins that must be sold for the company to break even. B) Calculate the number of tins of Bright Yellow, Light Yellow and Mellow Yellow that must be sold to break-even. C) How might Johnny's Paints reduce its break-even pointStep by Step Solution
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