Question
PLEASE HELP WITH A-I ASAP THANK YOU!!!! Carter, Inc. produces two different products, Product A and Product B. Carter uses a traditional volume-based costing system
PLEASE HELP WITH A-I ASAP THANK YOU!!!!
Carter, Inc. produces two different products, Product A and Product B. Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost across three activities: Design, Production, and Inspection. The cost of each activity and usage of the activity drivers are as follows: |
Cost | Usage by Product A | Usage by Product B | ||
Design (Engineering Hours) | $ | 409,200 | 260 | 360 |
Production (Direct Labor Hours) | $ | 453,200 | 106,000 | 306,000 |
Inspection (Batches) | $ | 291,200 | 360 | 160 |
Carter manufactures 10,600 units of Product A and 8,100 units of Product B per month. |
Required: | |
a. | Calculate the predetermined overhead rate under the traditional costing system. (Round your answer to 2 decimal places.) |
b. | Calculate the activity rate for Design. |
c. | Calculate the activity rate for Machining. (Round your answer to 2 decimal places.) |
d. | Calculate the activity rate for Inspection. |
e. | Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. (Round your intermediate calculations to two decimal places. Round your answer to 2 decimal places.) |
f. | Calculate the indirect manufacturing costs assigned to each unit of Product B under the traditional costing system. (Round your intermediate calculations to two decimal places. Round your answer to 2 decimal places.) |
g. | Calculate the indirect manufacturing costs assigned to each unit of Product A under the ABC system.(Do not round intermediate calculations. Round your answer to 2 decimal places.) |
h. | Calculate the indirect manufacturing costs assigned to each unit of Product B under the ABC system.(Do not round intermediate calculations. Round your answer to 2 decimal places.) |
i. | Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC? |
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