Memo Analysis

Please explain the benefits and challenges of using activity-based costing. Which costing method would you recommend; job costing, process costing, or activity-based costing. Please use below tables to explain the memo. Thank you so much.

FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign Calibri - 11 . A" A % Paste BIU - Alignment Number Conditional Format as Cell Cells Editing Formatting * Table Styles Clipboard G Font G Styles D9 X V fx A B C D E 10 Conversion cost $6,750 11 Units started into production during the period 6,200 12 Costs added to production during the period: 13 Materials cost $332,150 14 Conversion cost $407,645 15 Work in process, July 31: 16 Units in process 450 17 Percent completed with respect to materials 40% 18 Percent completed with respect to conversion 30% 19 20 Use the data to answer the following. 21 22 1. Compute equivalent units. 23 Mixing Department 24 Equivalent Units of Production 25 Materials Conversion 26 Units transferred to the next department 6,050 6,050 27 Ending work in process: 28 Materials 180 29 Conversion 135 30 Equivalent units of production V 6,230 6,185 312. Compute cost per equivalent unit. Mixing Department Cost per Equivalent Unit Materials Conversion Cost of beginning work in process $ 10,500 6,750 Cost added during the period 332,150 407,645 Total cost $ 342,650 $ 414,395 Equivalent units of production 6,230 6,185 Cost per equivalent unit $55.00 $67.00 3. Assign costs. Mixing Department Costs of Ending Work in Process Inventory and the Units Transferred Out Materials Conversion Total Ending work in process inventory: Equivalent units of production 180 135 Cost per equivalent unit $55.00 $67.00 Cost of ending work in process inventory $9,900 $9,045 $18,945 Units completed and transferred out: Units transferred to the next department 6,050 6,050 Cost per equivalent unit $55.00 $67.00 Cost of units transferred out $332,750 $405,350 $738,100Clipboard G Font Styles D9 X V A B C D E 49 Cost of ending work in process inventory $9,900 $9,045 $18,945 50 51 Units completed and transferred out: 52 Units transferred to the next department 6,050 V 6,050 53 Cost per equivalent unit $55.00 $67.00 54 Cost of units transferred out $332,750 $405,350 - $738,100 55 56 4. Prepare reconciliation. 57 Mixing Department 58 Cost Reconciliation 59 Costs to be accounted for: 60 Cost of beginning work in process inventory $17,250 61 Costs added to production during the period 739,795 62 Total cost to be accounted for $757,045 63 Costs accounted for as follows: 64 Cost of ending work in process inventory $18,945 65 Cost of units transferred out 738,100 Total cost accounted for $757,045 68 69 70A B C D E F G 22 when completing the table, copy formulas as appropriate. 23 24 Activity Cost Pools 25 Customer Product Customer Orders Development Relations Other Total 26 Production Department: 27 Indirect factory wages $200,000 $120,000 $60,000 $20,000 $400,000 28 Factory equipment depreciation 82,500 45,000 22,500 150,000 29 Factory utilities 70,800 40,800 8,400 120,000 30 Factory property taxes and insurance 42,750 24,750 7,500 75,000 31 32 General Administration Department: 33 Administrative wages and salaries 55,000 27,500 110,000 82,500 275,000 144 34 Office equipment depreciation 12,800 6,400 6,000 14,800 40,000 35 Administrative property taxes and insurance 60,000 60,000 36 37 Marketing Department: 38 Marketing wages and salaries 30,000 15,000 60,000 45,000 150,000 39 Selling expenses 32,000 16,000 V 15,000 37,000 100,000 40 41 Total $525,850 $295,450 $251,000 $297,700 $1,370,000 42 43 44 45