Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Allocate overhead costs using Activity-Based-Costing: ABC method This is for a review im doing, if you could show your work I would appreciate it. Im

Allocate overhead costs using Activity-Based-Costing: ABC method

image text in transcribed

This is for a review im doing, if you could show your work I would appreciate it. Im going to be using this to check against the work im doing, and I want to know how to fix something if i get it wrong. If you could make it easy to determine what answer goes where i woudl appreciate it. Thank you!

Question 3: Allocate overhead costs using Activity-Based Costing Stroud Corporation produces two types of bicycles, leisure and sport. The company only recently began producing the leisure bicycle. Management believes the accounting system may not be accurately allocating costs to products and has asked you to investigate the cost allocation problem. You found that manufacturing overhead is currently assigned based on the direct labor costs in the products. For your investigation, you are using data from last year. Last year's manufacturing overhead was $475,000 based on production of 100,000 leisure bicycles and 117,100 sport bicycles. Direct materials and direct labor costs were as follows Total Leisure Bicycle Sport Bicycle Direct materials 125,000 175,000 300,000 Direct labor 107,500 143,000 250,500 Management believes three activities drive overhead costs. The cost drivers and related costs for your analysis are as follows Activity Level Cost Driver Leisure Bicycle Sport Bicycle Total S 100,000 Number of production runs 1.000 S 150,000 Quality tests performed 3.000 2,000 5.000 225,000 Shipping orders processed 45,000 105,000 150,000 475,000 Required: 1. Using the Activity-based Costing (ABC assignment method, calculate the overhead allocation rate for each of the following cost drivers a. Number of productionnuns b. Nu of quality tests performed umber Number of shipping orders processed c. 2. Using the Activity-based Costing (ABC) assignment method, how much is the total allocated overhead cost for the Leisure Bicycles and for the Sport Bicycles 3. Using the Activity-based Costing (ABC) assignment method, how much is the total product cost per unit for the Leisure Bicycles and for the Sport Bicycles

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

Step: 3

blur-text-image

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

The Operational Auditing Handbook Auditing Business Processes

Authors: Andrew Chambers, Graham Rand

1st Edition

0471970603, 978-0471970606

More Books

Students also viewed these Accounting questions