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6 Problem 9-60 (Algo) Activity-Based Costing, Cost Flow Diagram, and Predetermined Overhead Rates (LO 9-3, 5, 6) Skipped Churchill Products is considering updating its cost
6 Problem 9-60 (Algo) Activity-Based Costing, Cost Flow Diagram, and Predetermined Overhead Rates (LO 9-3, 5, 6) Skipped Churchill Products is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The company's cost accountant has identified three overhead cost pools along with appropriate cost drivers for each pool. eBook Cost Pools Utilities Scheduling and setup Material handling Costs $265,000 290,000 795,000 Activity Drivers 53,000 machine-hours 580 setups 1,590,000 pounds of material References The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Total direct costs (material and labor) Total machine-hours Total number of setups Total pounds of material Total direct labor-hours Number of units produced Oval $ 80,000 25,000 80 450,000 3,500 3,800 Products Round $ 80,000 10,000 280 290,000 2,000 2,200 Square $ 90,000 18,000 220 850,000 4,500 6,000 Required: a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools identified by the cost accountant? d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product cos reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools identified by the cost accountant? d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's of cost pools is used? e. If management should decide to implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. Required A Required C Required D Required E The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? (Do not round intermediate calculations. Round "Per unit cost" answers to 2 decimal places.) Oval Round Square Total cost Per unit cost omplete this question by entering your answers in the tabs below. equired A Required C Required D Required E hat are the cost driver rates for the three cost pools identified by the cost accountant? (Round your answers to 2 decimal aces.) ties eduling and setup erial handling per machine hour per setup per pound Required: a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools identified by the cost accountant? d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. Required A Required C Required D Required E What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's classification of cost pools is used? (Do not round intermediate calculations. Round "Per unit cost" answers to 2 decimal places.) Oval Round Square Total cost Per unit cost Required: a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools identified by the cost accountant? d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. Required A Required C Required D Required E If management should decide to implement an activity-based costing system, what benefits should it expect? Olf management implemented an activity-based costing system it should be provided with a more thorough understanding of product costs. Olf management implemented an activity-based costing system it will increase the sales of the company
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