Coca-Cola Company allocates its overhead costs using activity-based costing. The company has identified two activity cost pools
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Question:
Coca-Cola Company allocates its overhead costs using activity-based costing. The company has identified two activity cost pools and allocation bases:
- Activity: Production Line Setup
- Total Cost: $10 million
- Allocation Base: Number of Production Line Setup Hours
- Total Setup Hours: 5,000
- Activity: Quality Control Inspections
- Total Cost: $15 million
- Allocation Base: Number of Inspections Conducted
- Total Inspections: 20,000
Requirements:
- Calculate the overhead cost allocation rate for production line setup.
- Determine the overhead cost allocation rate for quality control.
- Allocate the overhead costs to two product lines based on the following usage:
- Product Line X: 3,000 setup hours, 8,000 quality control inspections
- Product Line Y: 2,000 setup hours, 12,000 quality control inspections
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