Question
Problem 4: Tims Timekeepers Inc. manufactures three types of products: Sundials, Wall Clocks, and Grandfather Clocks. The company uses an activity-based costing system. At the
Problem 4:
Tims Timekeepers Inc. manufactures three types of products: Sundials, Wall Clocks, and Grandfather Clocks. The company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its three cost pools:
Cost Pool | Cost Driver | Expected Overhead Cost | Total Expected Activity |
Labor-related | Direct labor hours | $156,200 | 22,000 hours |
Clock Face etching | Number of units | $89,600 | 14,000 units |
General factory | Square footage | $180,200 | 170,000 square feet |
Expected activity for the year was distributed among the companys three products as follows:
|
| Expected Activity | ||
Cost Pool | Cost Driver | Sundials | Wall | Grandfathers |
Labor-related | Direct labor hours | 6,000 | 11,000 | 5,000 |
Clock face etching | Number of units | 5,000 | 8,000 | 1,000 |
General factory | Square footage | 30,000 | 80,000 | 60,000 |
Assume the actual amounts equaled the budgeted amounts. If the company uses the activity based costing method, how much of the overhead will be allocated to each of the products?
Problem 4: Tims Timekeepers Inc. manufactures three types of products: Sundials, Wall Clocks, and Grandfather Clocks. The company uses an activity-based costing system. At the beginning of the year, the company made the following estimates of cost and activity for its three cost pools: Cost Pool Cost Driver Expected Overhead Cost Total Expected Activity Labor-related Direct labor hours $156,200 22,000 hours Clock Face etching Number of units $89,600 14,000 units General factory Square footage $180,200 170,000 square feet Expected activity for the year was distributed among the companys three products as follows: Expected Activity Cost Pool Cost Driver Sundials Wall Grandfathers Labor-related Direct labor hours 6,000 11,000 5,000 Clock face etching Number of units 5,000 8,000 1,000 General factory Square footage 30,000 80,000 60,000 Assume the actual amounts equaled the budgeted amounts. If the company uses the activity based costing method, how much of the overhead will be allocated to each of the products?
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