Question
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the
Mello Manufacturing Company is a diversified manufacturer that manufactures three products (Alpha, Beta, and Omega) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
| 1 | Activity | Activity Cost Pool |
| 2 | Production | $242,089.00 |
| 3 | Setup | 88,425.00 |
| 4 | Material handling | 9,253.00 |
| 5 | Inspection | 49,623.00 |
| 6 | Product engineering | 167,990.00 |
| 7 | Total | $557,380.00 |
The activity bases identified for each activity are as follows:
| Activity | Activity Base |
| Production | Machine hours |
| Setup | Number of setups |
| Material handling | Number of parts |
| Inspection | Number of inspection hours |
| Product engineering | Number of engineering hours |
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
| Machine | Number of | Number of | Number of | Number of | ||
| Hours | Setups | Parts | Inspection Hours | Engineering Hours | Units | |
| Alpha | 984 | 57 | 84 | 441 | 125 | 1,366 |
| Beta | 847 | 126 | 158 | 284 | 191 | 991 |
| Omega | 390 | 210 | 245 | 248 | 219 | 475 |
| Total | 2,221 | 393 | 487 | 973 | 535 | 2,832 |
Each product requires 40 minutes per unit of machine time.
| Complete the Activity Table for Alpha |
| Alpha | |||||
| Activity | Activity- | ||||
| Base | Activity | Activity | |||
| Usage | X | Rate | = | Cost | |
| Production | __?_mh | __?_/mh | ? | ||
| Setup | __?__setups | _?__/setup | ? | ||
| Material handling | __?_parts | _?__/part | ? | ||
| Inspection | __?_insp. hours | __?_/hour | ? | ||
| Product Engineering | _?__eng. hours | /hour | |||
| Total activity cost | |||||
| Number of units | |||||
| Activity cost per unit | |||||
| Complete the Activity Table for Beta |
| Beta | |||||
| Activity | Activity- | ||||
| Base | Activity | Activity | |||
| Usage | X | Rate | = | Cost | |
| Production | |||||
| Setup | |||||
| Material handling | |||||
| Inspection | |||||
| Product Engineering | |||||
| Total activity cost | |||||
| Number of units | |||||
| Activity cost per unit | |||||
| Complete the Activity Table for Omega |
| Omega | |||||
| Activity | Activity- | ||||
| Base | Activity | Activity | |||
| Usage | X | Rate | = | Cost | |
| Production | |||||
| Setup | |||||
| Material handling | |||||
| Inspection | |||||
| Product Engineering | |||||
| Total activity cost | |||||
| Number of units | |||||
| Activity cost per unit | |||||
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The Economics Of Audit Quality Private Incentives And The Regulation Of Audit And Non Audit Services
Authors: Benito Arrunada
1999th Edition
0792384733, 978-0792384731
