Question
5 A company makes two products-Product A and B. Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Product A 0.75 20,000
5
A company makes two products-Product A and B. Data regarding the two products follow:
| Direct Labor-Hours per Unit | Annual Production | ||
| Product A | 0.75 | 20,000 units | |
| Product B | 0.50 | 50,000 units | |
Additional information is as follows:
- Product A requires $40 in direct materials per unit, and Product B requires $32.
- The direct labor wage rate is $18 per hour.
- The companys activity-based absorption costing system has the following activity cost pools.
| Estimated | Expected Activity | |||||||||||
| Activity Cost Pool (and Activity Measures) | Overhead Cost | Product A | Product B | Total | ||||||||
| Machine setups (number of setups) | $ | 100,000 | 100 | 300 | 400 | |||||||
| Special processing (machine-hours) | $ | 200,000 | 2,000 | 6,000 | 8,000 | |||||||
| General factory (Direct labor-hours) | $ | 150,000 | 15,000 | 25,000 | 40,000 | |||||||
How much overhead cost would be assigned from the Special processing activity to Product A?
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
