Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show work for #7, thank you! Marty Company uses an ABC system. They have the following data related to their overhead costs for the

image text in transcribedimage text in transcribed

Please show work for #7, thank you!

Marty Company uses an ABC system. They have the following data related to their overhead costs for the year just ended: Indirect Payroll costs: $2,000,000 Depreciation: $450,000 Utilities: $650,000 Rent: $400,000 Total $3,500,000 Marty Co. reports that the company believes four distinct activities drive their costs. These costs include (1) assembly, (2) setup, (3) customer relations, and (4) other. Marty also reports the information below regarding the proportions of each of the above costs that were driven by each of the four activities. Assembly Setup Other Total Customer Relations Indirect Payroll 45% 10% 15% 30% 100% Depreciation 80% 10% 5% 5% 100% Utilities 60% 15% 20% 5% 100% Rent 40% 20% 25% 15% 100% Assume also that Marty decides that the best cost drivers for each of the activities is direct labor dollars for Assembly, number of setups for Setups, number of customer orders for Customer Relations. The amounts for each of those cost drivers for each of the two product lines that Marty makes, X1 and X2, along with the direct material costs and number of units produced for each product line is given below. X1 X2 ore Total Direct Labor costs $800,000 $960,000 $1,760,000 Direct material costs $100,000 $105,000 $205,000 Number of setups 18 15 33 Number of customer orders 450 950 1400 Number of units produced 20,000 30,000 50,000 rean to 7. How much overhead cost should be allocated in the first stage allocation to the customer a. $552,500 b. $1,417,500 C. $2,000,000 d. $2,275,000 e. None of the above 7. Use the information above from question 7 to answer this question. What is the allocation rate per unit of activity that should be used in the second stage allocation to allocate the customer relations activity cost pool's cost to product lines? a. $2369.22 b. $453.29 c. $394.64 d. $25 SS2, Soo/1400 e. None of the above 8. Use the information above from question 7 to answer this question. How much overhead cost should be allocated, during the second stage allocation, from the customer relations activity cost pool to product X1? a $7,104 b. $177,589 C. $227,482 d. $450,000 None of the above 450*399.64

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operational Auditing A Complete Guide Practical Tools For Self Assessment

Authors: The Art Of Service Operational Auditing Publishing

2021 Edition

1867442043, 978-1867442042

More Books

Students also viewed these Accounting questions