Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour

image text in transcribedimage text in transcribedimage text in transcribed

Blossom Inc. makes two types of handbags: standard and custom. The controller has decided to use a plant-wide overhead rate based on direct labour costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining (machine hours) and machine set-up (number of set-ups). The total estimated machine hours is 1,500, and the total estimated number of setups is 500. Presented below is information related to the company's operations. Standard Custom Direct labour costs $50,000 $100,000 Machine hours 500 1,000 Set-up hours 100 400 Total estimated overhead costs are $262,500. The overhead cost allocated to the machining activity cost pool is $166,500, and $96,000 is allocated to the machine set-up activity cost pool. Your answer is correct. Calculate the overhead rate using the activity-based costing approach. Cost Pool Machining Overhead Rate 111 per machine hour Machine set-up $ 192 per set-up hour Determine the difference in allocation between the two approaches. Traditional costing Activity-based costing Standard Custom $ AA SA +A +A $ Difference

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

Advanced Accounting

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

11th Edition

978-0132568968, 9780132568968

More Books

Students also viewed these Accounting questions

Question

1. Give them prompts, cues, and time to answer.

Answered: 1 week ago