Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect
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Question:
Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows:
Activity | Activity Pool Cost | Activity Base | |||
Procurement | $12,600 | Number of purchase orders | |||
Scheduling | 90,000 | Number of production orders | |||
Materials handling | 11,000 | Number of moves | |||
Product development | 50,000 | Number of engineering changes | |||
Total cost | $163,600 |
The estimated activity-base usage and unit information for two product lines was determined from corporate records as follows:
Number of Purchase Orders | Number of Production Orders | Number of Moves | Number of Engineering Changes | Units | ||||||||||||
Ovens | 400 | 800 | 300 | 80 | 1,000 | |||||||||||
Refrigerators | 300 | 400 | 200 | 120 | 500 | |||||||||||
Totals | 700 | 1,200 | 500 | 200 | 1,500 |
a. Determine the activity rate for each activity cost pool.
Procurement (per purchase order) | $ |
Scheduling (per production order) | $ |
Materials handling (per move) | $ |
Product development (per engineering change) | $ |
b. Determine the activity-based cost per unit of each product.
Ovens | $ per unit |
Refrigerators | $ per unit |
Related Book For
Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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