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Carsem builds custom boats For Year 4, Carsem is considering the use of activity-based costing. Carsem Inc. has identified 3 different activity pools for its
Carsem builds custom boats For Year 4, Carsem is considering the use of activity-based costing. Carsem Inc. has identified 3 different activity pools for its overhead costs The estimated activity levels for the chosen activity drivers used for each pool are summarized below: Estimated activity levels for the year 14000 setups 6200 testing hours 61000 direct labor hours Activity Driver Cost pools Pool A Pool B Pool C Hours of quality-testing Total estimated overhead costs of $2005800 for Year4 were allocated to the 3 pools as follows Pool A $728000 Pool B: $179800 Pool C: $1098000 The first boat Carsem manufactured in Year4 was for Customer #1060. The process required the following resources $364540 cost of direct materials $100125 cost of direct labor 3200 direct labor hours 740 machine setups 350 quality-testing hours 1. Assume Carsem used a plant-wide overhead rate based on direct labor hours. What would Carsem use as the activity rate? Round your rate to the nearest dollar. When rounding, only consider the first 2 numbers after the decimal point. Do not use any punctuation Example: Assume you get answer that is 16.xx If 16.00 to 16.49 round to 16 If 16.50 to 16.99 round to 17 per direct labor hour 2. For all of the following questions, assume Carsem uses activity-based costing and the 3 pools listed above a. What would Carsem use as the activity rate for pool C? Round your rate to the nearest dollar. (Use the rounding rules in question 1.) Do not use any punctuation b. How much of the Pool B (quality-testing) overhead is allocated to the boat manufactured for customer #1060? Do not use any punctuation C. How much total overhead is allocated to the boat manufactured for Customer #1060? Use activity rates, not proportions or you may get different answers Round all activity rates to the nearest dollar before you do this computation. Do not use any punctuation
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