Homework: Chapter 19 Homework Score: 0 of 1 pl P19-33A (similar to) Save 42o ( c

Question

Homework: Chapter 19 Homework Score: 0 of 1 pl P19-33A (similar to) Save 42o ( complcte) HW Score: 0%. Oof 5 pts McNcl Pharmaceuiczi manutacturers an aver tha-counter alergy medication. The campany rels bath larg commercial container o1,UDD capculs to heahcare aclHes and travel packs 1 2U cpaues to theps In arperts, train staiona, and hate. The tolloing ntoma on hae ben developed to datarmine it an product Round to tro dscimal plates Indirect cost per unh Data Tatl Estimated overhead costs Numbcr of unts Lstimaced Juancity Maals hanling 95 000 Niimhar at kins 210.000 Numbe uf mchine ou 3,000 hours 1,000 smgi coats to products at $14.0 per machine hour. Computeth tatal indircct cots alocatsd to ths Commercial Contins Travel Packs ?ndirect cost per unt for cach product. Round to two decinal paces. Uni oduce Wigh in kles 2,800 coniainers 0,400 1,960 51000 pks 5.100 the commercial containers andthe travel packs. Roundto two decmal place5.Hnt. First 765 trach onall syscm o ha unt coats chancd?xp n why the coats changed Pint Done Choose 11 parts Clear Al

Explanation / Answer

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Working:

2.

Working:

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Working:

4.

The reason for the difference is .

1. Under the plant wide allocation system, the base used being machine hours, which was high for commercial containers (almost four times) than machine hours for travel packs resulted in unusally high allocation for commercial containers. This was due to the fact that quality assurance cost (the second highest cost item) has no relationhip with machine hours worked.

2. Under the activity based system, this was rectified and the cost of the activities were allocated based on the corresponding activity drivers which resulted higher cost of quality assurance allocated to travel bas and thereby increasing the cost per unit of travel bags and reducing the cost per unit of commercial containers.

Commercial Containers Travel Packs Indirect cost allocated 274400 71400 Indirect cost per unit $47.31 $1.40

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