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Creek, Inc. manufactures DVDs used for recording digital content. In the past, it has used traditional costing methods for allocating manufacturing overhead. It is considering
Creek, Inc. manufactures DVDs used for recording digital content. In the past, it has used traditional costing methods for allocating manufacturing overhead. It is considering the possibility of using activity based costing as an alternative to allocate manufacturing overhead. The accountants for the company have arrived at the attached estimates for the upcoming year for production. During the month of June of the current year, the company manufactured 800,000 DVDs with the attached costs and cost driver usage. REQUIRED: (1) (2) Calculate the total amount of manufacturing overhead that the company should charge to production using activity based costing for the month of June. Round all calculations to the nearest whole dollar. Calculate the total manufacturing costs and the manufacturing cost per unit for production for the month of June using activity based costing. Round your cost per unit to five decimal places. Activity Center Materials Handling Quality Inspections Machine Setups Machine Operations CREEK, INC. ESTIMATED DATA FOR ACTIVITY BASED COSTING FOR UPCOMING YEAR Cost Driver Predetermined Rate Per Unit of Cost Driver Pounds of Material Handled $ 12.50 per pound Number of Inspections $ 75.00 per inspection Number of Setups $ 1,200.00 per setup Number of Machine Hours $ 15.00 per machine hour CREEK, INC. ACTUAL PRODUCTION RESULTS FOR MONTH OF JUNE $ Direct Materials Used $ 160,000 200,000 4,500 Direct Labor Pounds of Materials Handled Number of Inspections Number of Machine Setups Machine Hours Used 625 40 27,500
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