Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar and powdered sugar) in a continuous production process. Senior management has asked

image text in transcribed
image text in transcribed
Activity-Based Product Costing Sweet Sugar Company manufactures three products (white sugar, brown sugar and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows Activity Budgeted Activity Cost Production 5483,600 Setup 228,000 Inspection Shipping Customer service 121,500 154,000 33,900 $1,021,000 Total The activity bases identified for each activity are as follows: Activity Activity Base Production Machine hours Setup Number of setups Inspection Number of inspections Shipping Number of customer orders Customer service Number of customer service requests The activity bata usage quantities and units produced for the three products were determined from corporate records and are as follows: Customer Number of Number of Number of Service Setups Machine Hours Inspections Customer Orders Requests Units White sugar 3,430 150 300 880 30 8,525 Customer Number of Number of Number of Service Setups Customer Orders Machine Hours Inspections Requests Units White sugar 3,430 150 300 880 30 8,575 Brown sugar 2,180 230 450 2,420 190 5,450 Powdered sugar 2,190 220 750 1,100 80 5,475 Total 7,800 600 1,500 4,400 300 19,500 Each product requires 0.9 machine hour per unit) Required: If required, round all per unit amounts to the nearest cent. 1. Determine the activity rate for each activity Production per machine hour Setup per setup Inspection per move Shipping per cust. ord Customer service per customer service request 2. Determine the total and per unit activity cost for all three products Total Activity Cost Activity Cost Per Unit White sugar Brown sugar Powdered sugar 3. Why aren't the activity unit costs equal across all three products since they require the same machine time per unit? The unit costs are different because the products consume many activities in ratios different from the

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Sector Accounting

Authors: Budding, Tjerk, Grossi, Giuseppe, Tagesson, Torbj

1st Edition

0415683149, 9780415683142

More Books

Students also viewed these Accounting questions

Question

How prepared was the organization for the new business strategy?

Answered: 1 week ago