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CHAPTER 7 PROBLEM TWO LISA Corporation has an activity-based costing system with three activity cost pools--Processing. Setting Up, and Other. Costs in the Processing
CHAPTER 7 PROBLEM TWO LISA Corporation has an activity-based costing system with three activity cost pools--Processing. Setting Up, and Other. Costs in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below: Activity Cost Pools Processings 59,500 Setting Up$ 18,386 Other $ 30,514 MHs Batches Product D7 9,900 Product H0 13,900 1,150 1,750 Total 23,800 2,900 Additional data concerning one of the company's products appears below: Sales (total) Direct materials (total) Direct labor (total) Required: Product D7 Product HO $224,800 $310,600 $ 74,500 $147,100 $106,590 $98,100 a. Calculate activity rates for the processing and setting up cost pools using activity-based costing. b. Determine the amount of overhead cost that would be assigned to Product D7. c. Determine the product margin for Product D7 using activity-based costing.
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