Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 45% of direct-labor cost, and direct

image text in transcribed

Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 45% of direct-labor cost, and direct labor totaled $872,000 for the quarter just ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection, in-process inspection, and final product certification. Number of parts, number of units, and number of orders have been selected as the respective cost drivers.

The following data show the pool rates that have been calculated by the company along with the quantity of driver units for the Dragon's:

image text in transcribed
Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 45% of direct-labor cost, and direct labor totaled $830,000 for the quarterjust ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection. in-process inspection, and nal product oertication. Number of parts, number of units, and number of orders have been selected as the respective cost drivers. The following data show the pool rates that have been calculated by the company along with the quantityI of driver units for the Dragon's: Pool Rota Drivel: Quantities $ 0.70 per part: 21.2 parts 0.24 per unit. 29,200units 12?. 00 per order 102 orders Requlred: A. Calculate the quarterly quality-control cost that is allocated to the Dragon product line under Whitman's traditional-costing system. 3. Calculate the quarterly quality-control cost that is allocated to the Dragon product line if activityhbased costing is used. C. Does the traditional approach under or overcost the product line? By what amount? _ _

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

Intermediate Accounting

Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

2nd edition

134730372, 134730370, 978-0134730370

More Books

Students also viewed these Accounting questions

Question

How is a standardized residual different from a residual?

Answered: 1 week ago

Question

2. I try to be as logical as possible

Answered: 1 week ago