Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Crane Steel Company has budgeted manufacturing overhead costs of $1,862,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and
Crane Steel Company has budgeted manufacturing overhead costs of $1,862,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Estimated Activity Centre Cost Driver Overhead Estimated Activity Material handling Number of moves $300,000 50,000 moves Purchase orders Number of orders $104,000 1,600 orders Product testing Number of tests $418,000 3,800 tests Machine set-up Number of set-ups $320,000 5,000 set-ups Machining Machine hours $720,000 100,000 machine hours Each unit of the products requires the following: Soft Steel Hard Steel Direct materials costs $300 $200 Direct labour costs $120 $60 Purchase orders 2 3 Machine set-up 5 10 Product testing 3 4 Machining 50 50 Material handling 4 6Under ABC, prepare a schedule showing the calculation of the activity-based overhead rates (per cost driver). (Round answers to 2 decimal places, e.g. 15.25.) Cost Pool Rate Cost Drivers Material handling per move Purchase orders per order Product testing per test Machine set-up per set-up Machining $ per machine hr
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started