Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rundle Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs
Rundle Company produces commercial gardening equipment. Since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. The costs and cost drivers associated with the four overhead activity cost pools follow: Activities Cost Cost driver Unit Level 47,600 1,700 labor hrs. Batch Level $21,150 45 setups Product Level $17,000 Percentage of use Facility Level $209,000 19,000 units Production of 740 sets of cutting shears, one of the company's 20 products, took 250 labor hours and 5 setups and consumed 15 percent of the product-sustaining activities. Requirec a. Had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? b. How much overhead is allocated to the cutting shears using activity-based costing? c. Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 740 units are produced. If direct product costs are $170 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? Complete this question by entering your answers in the tabs below Required A Required C and B Compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 740 units are produced. If direct product costs are $170 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (Round intermediate calculations and final answers to 2 decimal places.) Show less ABC Labor Hrs Allocated overhead Direct cost Total cost per unit Desired profit Sales price 0.00 0.00 0.00 S 0.00
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