Alabama Paper Company manufactures three products (computer paper, newsprint, an
ID: 2376624 • Letter: A
Question
Alabama Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
The activity bases identified for each activity are as follows:
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Each product requires 0.9 machine hour per unit.
If required, round all per unit amounts to the nearest cent.
1. Determine the activity rate for each activity.
2. Determine the total and per-unit activity cost for all three products. Round per unit answers to the nearest cent.
Activity Activity Cost Pool Production $430,700 Setup 165,600 Moving 70,200 Shipping 149,600 Product Engineering 44,800 Total $860,900Explanation / Answer
Activity cost
Activity budgeted
Activity rate
Production
MC hrs
$430,700
7300
59
Setup
No of set up
165,600
400
414
Moving
No of move
70,200
900
78
Shipping
No of custo
149,600
4400
34
Product Engineering
No of test
44,800
400
112
Activity cost
Activity budgeted
Activity rate
Production
MC hrs
$430,700
7300
59
Setup
No of set up
165,600
400
414
Moving
No of move
70,200
900
78
Shipping
No of custo
149,600
4400
34
Product Engineering
No of test
44,800
400
112
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