Question
Perdon Corporation manufactures safeslarge mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of
Perdon Corporation manufactures safeslarge mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead.
Mobile Safes | Walk-in Safes | |||
---|---|---|---|---|
Units planned for production | 200 | 50 | ||
Material moves per product line | 300 | 200 | ||
Purchase orders per product line | 450 | 350 | ||
Direct labor hours per product line | 800 | 1,700 |
Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC. (Round answers to 2 decimal places, e.g. 12.25.)
Traditional Costing | Activity-Based Costing | |||
---|---|---|---|---|
Mobile safe | enter a dollar amount rounded to 2 decimal places | enter a dollar amount rounded to 2 decimal places | ||
Walk-in safe | enter a dollar amount rounded to 2 decimal places | enter a dollar amount rounded to 2 decimal places |
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