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Posted on Jul 09, 2024

2 Sundial Company has assigned $710,000 in total overhead cost to four different activity cost pools. The activity requirements for its two products lines, Economy

2 Sundial Company has assigned $710,000 in total overhead cost to four different activity cost pools. The activity requirements for its two products lines, Economy and Deluxe, are shown below. Input formulas to solve for the various unknowns in the table below. The formulas may vary for each cost pool depending on what items are known and unknown. 6 1 Assign indirect costs to products or services using activity based costing. 7 Note: Use cell A2 from the given information to complete this question. 8 Activity Requirements by Product Line Activity Activity Economy Activity Deluxe Activity 10 Activity Cost Pool Overhead Cost Cost Driver Rate Model Proportion (%) Model Proportion (%) 11 Material Handling $ 300,000 5,000 Material moves per move 2,000 3,000 12 Machine Set-Ups S 210,000 Set-ups per set-up 300 900 Engineering Support Engineering hours $ 12.50 per hour 2,000 20% 14 Power and Space 20,000 square feet per square feet 50% 15 Total overhead cost $ 710,000 16 17 Use formulas to assign overhead to each product using both activity rates and activity proportions (%). 18 19 Create if/then statements to verify that the two methods produce the same results. 20 Note: Use cell A2 from the given information to complete this question. 21 Verification: Create if/then statements to determine if the two methods 22 Overhead Assigned Using Activity Proportions produce identical results by indicating Overhead Assigned Using Activity Rates (%) "pass" or "fail" 23 Activity Cost Pool Economy Deluxe Total Economy Deluxe Total Economy Deluxe Total 24 Material Handling pass pass pass 25 Machine Set-Ups pass pass pass 26 Engineering Support pass pass pass 27 Power and Space ass pass pass 28 Total Overhead Cost pass pass pass 29

Step by Step Solution

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Step: 1

To solve this problem step by step lets break down the tasks required Step 1 Understanding the Problem Sundial Company has assigned a total overhead cost of 710000 to four different activity cost pools The company needs to allocate these costs to two product lines Economy and Deluxe using ActivityBased Costing ABC The table provided includes information about overhead costs activity cost drivers activity rates and activity requirements by product line Step 2 Assign Overhead Costs Using Activity Rates Well start by calculating the overhead assigned to each product line using activity rates a Material Handling Overhead Cost 300000 Cost Driver Material moves Total Material Moves 5000 moves Activity Rate per Move ActivityRate TotalOverheadCost TotalCostDriverQuantity 300 000 5 000 60 per move textActivity Rate fractextTotal Overhead CosttextTotal Cost Driver Quantity frac3000005000 60 text per move ActivityRateTotalCostDriverQuantityTotalOverheadCost500030000060per move Overhead Assigned Economy Model 2 000 60 120 000 2000 times 60 120000 200060120000 Deluxe Model 3 000 60 180 000 3000 times 60 180000 300060180000 b Machine SetUps Overhead Cost 210000 Cost Driver Setups Total SetUps 1200 300 for Economy and 900 for Deluxe Activity Rate per SetUp ActivityRate TotalOverheadCost TotalCostDriverQuantity 210 000 1 200 175 per setup textActivity Rate fractextTotal Overhead CosttextTotal Cost Driver Quantity frac2100001200 175 text per setup ActivityRateTotalCostDriverQuantityTotalOverheadCost1200210000175per setup Overhead Assigned Economy Model 300 175 52 500 300 times 175 52500 30017552500 Deluxe Model 900 175 157 500 900 times 175 157500 900175157500 c Engineering Support Overhead Cost Not provided assume this needs to be calculated Cost Driver Engineering hours Activity Rate per Hour 1250 Total Engineering Hours 20 for Economy 80 for Deluxe Assume the percentage is based on the total overhead assigned to this cost pool ... blur-text-image