Geneva, Inc., makes two products, X and Y, that require allocation of indirect m
ID: 2329806 • Letter: G
Question
Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations:
The total cost of purchasing and receiving parts used in manufacturing is $60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were $48,000 and $12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
a.
b.
c.
d.
Product X Product Y Quantity produced 10,000 20,000 Direct manufacturing labor hours 40,000 10,000 Number of purchase orders 500 2,000Explanation / Answer
Answer is option C
Purchase order allocation
Product X = 500/(2000+500) = 20%
Product Y = 2000/(2000+500) = 80%
Cost Allocation
Product X = 20% *60000 = 12000
Product Y = 80% * 60000 = 48000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.