Question
Billy Company manufactures two products (AA and BB). The overhead costs (252,000) have been divided into four cost pools that use the following activity drivers:
Billy Company manufactures two products (AA and BB). The overhead costs (252,000) have been divided into four cost pools that use the following activity drivers:
| Product | Number of Orders | Number of Setups | Number of Labor Transactions | Labor Hours |
| AA | 20 | 30 | 400 | 2,000 |
| BB | 60 | 70 | 800 | 500 |
| Cost per pool | $40,000 | $39,000 | $48,000 | $125,000 |
The direct materials and direct labor used to produce products AA and BB are:
Direct Materials AA - $125,000 BB - $100,000 Direct Labor AA - 120,000 BB - 50,000
Required:
a. Compute the plant-wide overhead rate using labor hours.
b. Calculate the total costs assigned to products AA and BB using the plant-wide overhead rate.
c. Compute the allocation rates for each of the activity drivers listed.
d. Calculate the total costs assigned to products AA and BB using the activity-based costing approach?
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Computer Accounting With Peachtree Complete 2011
Authors: Carol Yacht, Peachtree Software
15th Edition
007811098X, 978-0078110986
