Question
31. Houseal Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Total Cost Total Activity Assembly $ 613,250 55,000 machine-hours
31. Houseal Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool | Total Cost | Total Activity | ||||||||
Assembly | $ | 613,250 | 55,000 | machine-hours | ||||||
Processing orders | $ | 46,170 | 1,500 | orders | ||||||
Inspection | $ | 146,110 | 1,900 | inspection-hours | ||||||
Data concerning one of the company's products, Product W58B, appear below:
Selling price per unit | $ | 113.70 |
Direct materials cost per unit | $ | 48.14 |
Direct labor cost per unit | $ | 11.62 |
Annual unit production and sales | 360 | |
Annual machine-hours | 1,040 | |
Annual orders | 60 | |
Annual inspection-hours | 30 | |
According to the activity-based costing system, the product margin for product W58B is:
2. Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:
Overhead costs: | |||||||
Equipment depreciation | $ | 92,000 | |||||
Supervisory expense | $ | 4,000 | |||||
Distribution of Resource Consumption Across Activity Cost Pools:
Activity Cost Pools | |||||
Machining | Order Filling | Other | |||
Equipment depreciation | 0.60 | 0.20 | 0.20 | ||
Supervisory expense | 0.30 | 0.20 | 0.50 | ||
In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.
Activity:
MHs (Machining) | Orders (Order Filling) | |
Product W1 | 4,200 | 800 |
Product M0 | 15,800 | 200 |
Total | 20,000 | 1,000 |
Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.
Sales and Direct Cost Data:
Product W1 | Product M0 | |||||||||
Sales (total) | $ | 236,500 | $ | 262,000 | ||||||
Direct materials (total) | $ | 90,900 | $ | 123,900 | ||||||
Direct labor (total) | $ | 110,400 | $ | 76,100 | ||||||
The activity rate for the Machining activity cost pool under activity-based costing is closest to:
3. In time-based activity-based costing, the practical capacity percentage is an estimate of the companys capacity in relation to its closest competitor. true or false
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