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Part 3: Activity-Based Costing Similarly, Mr. Suncat has a couple of questions for you regarding the activity-based costing method. He has provided the following additional
Part 3: Activity-Based Costing Similarly, Mr. Suncat has a couple of questions for you regarding the activity-based costing method. He has provided the following additional information: a. Explain the difference between a job-order costing system and an activity-based costing system. b. Identify two reasons why an activity-based costing system may be appropriate for the Suncat Cake Shop. c. Above, you will see Mr. Suncat's cost pools and cost drivers for Suncat Cake Shop. Do you agree with them? Why or why not? If why not, what changes would you recommend? d. Using the information above, compute the activity-based overhead rate for each of the five cost pools. Round your answer to the nearest cent. Show all calculations and clearly label your answer. e. Using activity-based costing, compute the total manufacturing overhead cost that is expected to be allocated to each product. Show all calculations and clearly label your answer. 1. Basic Wedding Cake 2. Multi-layer Wedding Cake 3. Custom Wedding Cake f. Using activity-based costing, compute the product cost for each product. Show all calculations and clearly label your answer. 1. Basic Wedding Cake 2. Multi-layer Wedding Cake 3. Custom Wedding Cake g. Compare the total manufacturing overhead cost and the product cost for each product under both the job-order costing method and the activity-based costing method. Which costing method would you recommend to Mr. Suncat for Suncat Cake Shop and why
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