Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company produces numerous blends of coffee, two of which are known as the French Blend and the Italian Blend. The companys ABC system divides
A company produces numerous blends of coffee, two of which are known as the French Blend and the Italian Blend. The companys ABC system divides its total manufacturing overhead of $1,982,500 into four activity cost pools as shown below.
Activity | Activity Measure | Expected Activity | Estimated Cost | |
---|---|---|---|---|
Purchasing | Purchase orders | 1,500 | orders | $ 330,000 |
Materials handling | Number of setups | 1,800 | setups | $ 540,000 |
Quality control | Number of batches | 600 | batches | $ 210,000 |
Roasting | Roasting hours | 95,000 | hours | $ 902,500 |
Data regarding production of the French and Italian blends is as follows:
French Blend | Italian Blend | |||
---|---|---|---|---|
Expected sales | 100,000 | pounds | 7,000 | pounds |
Batch size | 10,000 | pounds | 1,250 | pounds |
Setups | 3 | per batch | 3 | per batch |
Purchase order size | 20,000 | pounds | 200 | pounds |
Roasting time per 100 pounds | 0.5 | hours | 0.5 | hours |
Assume the company uses activity-based costing. How much overhead cost would be assigned from the Purchasing activity to the Italian Blend based on its expected sales?
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