Answered step by step
Verified Expert Solution
Question
1 Approved Answer
-/1 Question 3 of 10 View Policies Current Attempt in Progress Crane Inc. manufactures two products: car wheels and truck wheels. To determine the amount
-/1 Question 3 of 10 View Policies Current Attempt in Progress Crane Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, John Johnson, has developed the following information: Estimated wheels produced Direct labour hours per wheel Car 43,000 2 Truck 20,000 4 Total estimated overhead costs for the two product lines are $830,000. Calculate the overhead cost assigned to the car wheels and truck wheels, assuming that direct labour hours are used to allocate overhead costs. Car wheels $ Truck wheels $ Total overhead $ eTextbook and Media John is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truckwheel product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs: Activity Cost Pools Setting up machines Assembling Inspection Estimated Overhead Costs $408,000 370.000 52.000 Estimated Use of Cost Drivers 800 set-ups 37,000 labour hours 104 inspections Calculate the activity-based overhead rates for these three cost pools. Cost Pool Setting up machines Rate per set-up $ $ Assembling per labour hour Inspection $ per inspection Calculate the cost that is assigned to the car and truck product lines using an activity-based costing system, given the following information: Use of Cost Drivers per Product Car Truck 190 610 20.500 16,500 45 59 Number of set-ups Direct labour hours Number of inspections Car Truck Overhead assigned $ $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started