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Gean produces golf carts. One of its plants in Texas produces two versions of carts: a basic model and a deluxe model. The deluxe
Gean produces golf carts. One of its plants in Texas produces two versions of carts: a basic model and a deluxe model. The deluxe model has a sturdier frame, a higher horsepower engine, bigger tires, and softer seats. At the beginning of the year, the following data were prepared by the controller's office for this Texas plant: Expected Quantity to Produce Selling Price Direct Material Cost Direct Labor Cost Machine Hours Direct Labor Hours Basic 20,000 carts Deluxe 10,000 carts $ 1,800 $ 3,600 $ 500 $ 1,000 $ 300 $ 600 1,000 10,000 3,000 10,000 Activity Center (Cost Driver) Engineering Support (Hours) 1,500 4,500 Receiving (Orders Processed) 300 500 Material Handling (Number of Moves) 2,000 4,000 Purchasing (Number of Orders) 100 200 Maintenance (Machine Hours Used) 1,000 3,000 Paying Suppliers (Invoices Processed) 250 500 20 60 Equipment Setups (Number of Setups) Total overhead costs of $6,000,000 associated with activity centers are reported as: Maintaining Equipment Engineering Support Material Handling Setting Up Equipment Purchasing Materials Receiving Goods Paying Suppliers $ 1,140,000 $ 1,200,000 $ 1,200,000 $ 960,000 $ 600,000 $ 400,000 S 300.000
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