Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Product X is anticipated to consume 40 machine setups, whereas Product Y will consume 20 setups. The budgeted cost for the machine setups cost pool

image text in transcribed
Product X is anticipated to consume 40 machine setups, whereas Product Y will consume 20 setups. The budgeted cost for the machine setups cost pool is $90,000. In the assembly cost pool, the budgeted cost is $168,000. Product X is budgeted to consume 300 machine-hours at the rate of 0.5 machine-hours per unit and Product Y will consume 400 machine-hours at the rate of 0.2 hours per unit. A total of 600 inspections will be performed on Product X and 400 inspections will be performed on Product Y at a total inspection cost of $120,000 Budgeted total direct labour-hours for Product X is 1,200 hours and for Product Y is 6,000 hours. Required a. Determine the overhead cost allocation to Product Y and to Product X if activity-based costing (ABC) is used and if the traditional method with direct labour-hours as the allocation base is used. (13) supporting calculation steps ABC approach Supporting calculations: b. Explain why the costs have shifted in the manner you have described in part(a) when ABC is applied instead of the traditional method of overhead cost allocation (3) Product X is anticipated to consume 40 machine setups, whereas Product Y will consume 20 setups. The budgeted cost for the machine setups cost pool is $90,000. In the assembly cost pool, the budgeted cost is $168,000. Product X is budgeted to consume 300 machine-hours at the rate of 0.5 machine-hours per unit and Product Y will consume 400 machine-hours at the rate of 0.2 hours per unit. A total of 600 inspections will be performed on Product X and 400 inspections will be performed on Product Y at a total inspection cost of $120,000 Budgeted total direct labour-hours for Product X is 1,200 hours and for Product Y is 6,000 hours. Required a. Determine the overhead cost allocation to Product Y and to Product X if activity-based costing (ABC) is used and if the traditional method with direct labour-hours as the allocation base is used. (13) supporting calculation steps ABC approach Supporting calculations: b. Explain why the costs have shifted in the manner you have described in part(a) when ABC is applied instead of the traditional method of overhead cost allocation (3)

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

Auditing And Edp Objective Questions And Explanations

Authors: Irvin N. Gleim, William A. Hillison

5th Edition

0917537521, 978-0917537523

More Books

Students also viewed these Accounting questions