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Please help me with this question. Thank you. Question 8 Compute Activity Rates and Assign to a Cost Object Z 3 4 5 6 7
Please help me with this question. Thank you.
Question 8 Compute Activity Rates and Assign to a Cost Object Z 3 4 5 6 7 8 9 10 11 Fielli Corporation produces furniture and fixtures for home theatre installations. Jim Jones, the owner of the company, recognized a trend in home theatre installations starting about three years ago and began working with local design firms and home builders to offer affordable yet high-quality furnishings for new construction and renovation markets. The company's most popular product is a leather upholstered recliner with a cup holder and snack tray built into each chair's arms. Last year, John decided to implement an ABC system to better understand the overall cost structure and to ensure he was charging competitive prices that would also allow the firm to remain profitable over the longer term. The ABC system is designed to allow direct material and direct labour to be traced directly to each of the company's four main products. The system also includes four activity cost pools for overhead: Quality Control and Inspection, Order Processing, Delivery and Installation, and other. The activity measures are units produced for Quality Control and Inspection, number of orders for Order Processing, and number of deliveries for Delivery and Installation. The Other cost pool has no activity measure. The following costs will be assigned using the ABC system: 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Indirect factory salaries Delivery crew wages expense Vehicle operating expenses Order processing salaries exper Office expenses Other administrative expenses Total cost $ 1,040,000 280,000 190,000 206,000 50,000 450,000 $ 2.216,000 The distribution of resource consumption across the activity cost pools is as follows: Delivery & Installation Order Processing Other Totals 30 31 32 33 34 35 36 37 Indirect factory salaries Delivery crew wages expense Vehicle operating expenses Order processing salaries experi Office expenses Other administrative expenses Quality Control & Inspection 50% 0% 0% 10% 15% 15% 25% 75% 80% 10% 15% 5% 20% 10% 10% 65% 35% 40% 5% 15% 10% 15% 35% 40% 100% 100% 100% 100% 100% 100% H AB 38 he ABC system at Movie Time contains the following activity cost pools and activity rates this year: 39 40 Activity Total Activity 41 Quality control and inspection 9,600 units produced 42 Delivery and installation 2,400 deliveries 43 Order processing 1,840 orders processed 44 Other None 45 46 Activity data have also been supplied for the leather recliner product line: 47 48 Activity Total Activity 49 Quality control and inspection 2,400 units produced 50 Delivery and installation 600 deliveries 51 Order processing 460 I orders processed Required: 1. Compute the activity rates for the ABC system. 53 54 55 56 57 First-stage allocations of costs to activity cost pools Delivery & Installation Order Processing Other Totals 58 59 60 61 Quality Control & Inspection Indirect factory salaries Delivery crew wages expense Vehicle operating expenses Order processing salaries expense Office expenses Other administrative expenses Total 62 63 64 Activity rates for the ABC system 65 66 67 68 69 70 71 Total Cost Activity Cost Pools Quality control and inspection Delivery and installation Order processing Total Activity Units produced deliveries Orders Activity Rate Per unit Per delivery Per or 72 73 74 2. Determine the total overhead cost that would be assigned to the leather recliner product line using the ABC system. ABC Cost $ $ 75 76 77 78 79 80 81 82 83 Activity Cost Pools Quality control and inspection Delivery and installation Order processing Total overhead cost Activity Rate Per unit Per delivery Per order Activity Units Deliveries OrdersStep by Step Solution
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