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Major Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 150 pressure gauges were produced, and
Major Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 150 pressure gauges were produced, and overhead costs of $125,000 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost Materials handling No. of requisitions $ 30,000 3. Machine setups No. of setups 45,000 Quality inspections No. of inspections 50,000 $ 125,000 The cost driver volume for each product was as follows. Cost Drivers Instruments Gaures Total No. of requisitions 400 600 1,000 No. of setups 200 300 500 No. of inspections 200 400 600 Instructions: (a) Determine the overhead rate for each activity. (6) Assign the manufacturing overhead costs for April to the two products using activity-based costing (ABC). NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". (a) Determine the overhead rate for each activity. Activity Based Overhead Rates Expected Use of Cost Drivers per Activity Estimated Overhead Activity Cost Pools Materials handling (requisitions) Machine setups Quality inspections Total Cost Assigned Cost (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing (ABC). Instruments Gauges Cost Driver Number Cost Number Requisitions Machine setups Inspections Total costs assigned Units produced Overhead Cost per Unit
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