Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

n Question 7 2 pts Lo Tech Inc. makes 2 distinct products, Inspire and Workhorse. The company uses an activity-based costing (ABC) system. Information

image text in transcribed

n Question 7 2 pts Lo Tech Inc. makes 2 distinct products, Inspire and Workhorse. The company uses an activity-based costing (ABC) system. Information that relates to the company is presented below. Inspire Workhorse Total units 300,000 800,000 produced Number of units per batch 6,000 12,500 Total overhead $X $Y cost per unit Batch-level Overhead Costs: Total batch level overhead cost: $7,000,000 Batch level overhead cost is made up entirely of machine set up cost (e.g., the cost incurred to clean the machine, check machine functionality, conduct test runs) which is incurred before a batch of output is produced. The more machine set ups required, the higher the total batch level overhead cost. Each machine set up (irrespective of whether it relates to Inspire or Workforce) costs the same amount. Unit-level Overhead Costs Total unit-level overhead costs: $5,000,000 Total overhead costs: $7,000,000+ $5,000,000 = $12,000,000 The value of $X i.e., Inspire's total overhead cost per unit is closest to: $17.50 O $14.80 $10.90 $8.90 $16.20

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen

6th Edition

0077185536, 978-0077185534

More Books

Students also viewed these Accounting questions

Question

Define deferred revenue. Why is it a liability?

Answered: 1 week ago