Question
Table 1: ABC activities, cost drivers, and cost pools Activity Activity cost driver Estimated activity usage Estimated cost Production Machine hours 600,000 $ 1,650,000 Materials
Table 1: ABC activities, cost drivers, and cost pools
Activity Activity cost driver Estimated activity usage Estimated cost Production Machine hours 600,000 $ 1,650,000 Materials Lbs of etching solutions 175,050 525,150 Cleansing DLH (cleansing) 85,000 275,000 Inspection # of inspections 3,500 122,600
Table 2: Job proposal (resources) Direct materials cost $ 8,750 Direct labor cost $ 14,600
Direct labor hours (in production) 1,175 Direct labor hours (in cleansing) 780 Lbs of material 6,850 Number of setups 15 Types of etching solution 6 Number of inspections 275 Number of machine-hours 3,570
Required: Write a 1-2 page memo, as the accounting consultant of Roger Chemometrics, LTD, addressed to Ms. Kate Fischer describing your analysis and the recommendation. Make sure you respond to the following items: a) Using current traditional costing (plantwide) method, estimate the total cost estimate of the proposed job. Ms. Fischer expects to use a total of 125,000 direct labor hours for the upcoming fiscal year. b) Using current ABC method, estimate the total cost estimate of the proposed job. c) Explain to Ms. Fischer which cost estimate should be used to develop her bid, and why. d) Use ABM to address to Ms. Fischer's concern about process inefficiencies driving up costs.
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