Question
PoseiDon Inc. (PDI) recently started operations to obtain a share of the growing golfing market. PDI manufactures two models of specialty drivers: the Thunderbolt model
PoseiDon Inc. (PDI) recently started operations to obtain a share of the growing golfing market. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. The company was formed as a partnership by two professional engineers and a professional golfer, none of whom had any accounting experience. The business has been very successful, and to cope with the increased level of activity, the partners have hired a professional accountant as their controller. One of the first improvements the controller wants is an update of the costing system, changing from a single overhead application rate using direct labour-hours to activity-based costing. The controller has identified the following three activities as cost drivers, along with the related cost pools: Model Number of Materials Requisitions Number of Product Inspections Number of Orders Shipped Thunderbolt 340 140 107 Earthquake 560 210 99 Total costs in the cost pool $ 477,000 $ 38,500 $ 98,880 Required: Using ABC, prepare a schedule that shows the allocation of the costs of each cost pool for each model.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started