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Please show formulas or image of work. The Track corporation makes mountain bikes. They make several different models. Under the old cost system Track allocated
Please show formulas or image of work.
The Track corporation makes mountain bikes. They make several different models. Under the old cost system Track allocated overhead based on number of units produced. Overall, Track produces 150,000 bicycles each year. This year the production was higher 180,000 bicycles. Track decided to switch to Activity Based Costing as it was consistently selling its basic model for $800, which is less than any competitor was offering a similar model. The following data relates to the basic model:
Budget Actual Annual Production 40,000 units 45,000 Direct Materials $400 per unit $420 Direct Labor $100 per unit $130 Firm-wide Manufacturing Overhead Cost Pools: Cost Pool Cost Driver Cost Budget Actual Material Ordering Number of purchase orders $400,000 $380,000 Machine Setup Number of setups $6,000,000 $7,200,000 Machine Processing Machine hours $14,000,000 $16,000,000 Rent & other fixed costs Direct labor costs $5.000.000 $6.500.000 Total overhead $25,400,000 $30,080,000 Annual Activity Cost Pool All Products Basic model Budget Actual Budget Actual Material Ordering 40,000 purchase orders 42,000 8,000 9,000 Machine Setup 6,000 setups 6,500 1,000 1,500 Machine Processing 50,000Mhr 70,000 15,000Mhr 18,000 Rent & other fixed $5.000.000 DL 6,000,000 ? CostsCorporate Clients Private Clients Number of clients in Year 1 250 250 Number of clients in Year 2 270 180 Average revenues in Year 1 $700 $200 Average professional labor cost in Year 1 $200 $70 Average administrative support cost in Year 1 $60 $20Step by Step Solution
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