Health R Us, Inc , uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products To meet Food and Drug Administration requirements and to assure its customers of safe, sanitary, and nutritious food, Health R Us engages in a high level of quality control Health R Us assigns its quality control overhead costs to all products at a rate of 17 of direct labor costs Its direct labor cost for the month of June for its low calorie breakfast line is $65,000 In response to repeated requests from its financial vice president, Health R Uss management agrees to adopt activity based costing Data relating to the low calorie breakfast line for the month of June are as follows Activity Cost Pools Cost Drivers Overhead Rate Number of Cost Drivers Used per Activity Inspections of material received Number of pounds $0 90 per pound 5,500 pounds In process inspections Number of servings $0 33 per serving 9,500 servings FDA certification Customer orders $12 00 per order 400 orders (a) Compute the quality control overhead cost to be assigned to the low calorie breakfast product line for the month of June (1) using the traditional product costing system (direct labor cost is the cost driver), and (2) using activity based costing Traditional product costing Activity based costing Quality control overhead cost to be assigned $ $ eTextbook and Media Save for Later Attempts 0 of 3 used Submit Answer Using multiple attempts will impact your score 10 score reduction after attempt 2 (b) By what amount does the traditional product costing system undercost or overcost the low calorie breakfast line $ OvercostUndercost eTextbook and Media Save for Later Attempts 0 of 3 used Submit Answer Using multiple attempts will impact your score 10 score reduction after attempt 2 (c) Classify each of the activities as value added or nonvalue added Activites Inspections of material received Non value addedValue added In process inspections Non value addedValue added FDA certification Non value addedValue added

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 13, 2024

Health R Us, Inc., uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products. To meet Food and

Health R Us, Inc., uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products. To meet Food and Drug Administration requirements and to assure its customers of safe, sanitary, and nutritious food, Health R Us engages in a high level of quality control. Health R Us assigns its quality-control overhead costs to all products at a rate of 17% of direct labor costs. Its direct labor cost for the month of June for its low-calorie breakfast line is $65,000. In response to repeated requests from its financial vice president, Health R Uss management agrees to adopt activity-based costing. Data relating to the low-calorie breakfast line for the month of June are as follows.

Activity Cost Pools	Cost Drivers	Overhead Rate		Number of Cost Drivers Used per Activity
Inspections of material received	Number of pounds	$0.90	per pound	5,500	pounds
In-process inspections	Number of servings	$0.33	per serving	9,500	servings
FDA certification	Customer orders	$12.00	per order	400	orders

(a)

Compute the quality-control overhead cost to be assigned to the low-calorie breakfast product line for the month of June (1) using the traditional product costing system (direct labor cost is the cost driver), and (2) using activity-based costing.

		Traditional product costing		Activity-based costing
Quality-control overhead cost to be assigned		$		$

eTextbook and Media

Save for Later

Attempts: 0 of 3 used

Submit Answer

Using multiple attempts will impact your score.

10% score reduction after attempt 2

(b)

By what amount does the traditional product costing system undercost or overcost the low-calorie breakfast line?

OvercostUndercost