E-7-4 - Please explain how you arrived at your answers. Thank you! Exercise 7-4
ID: 2416387 • Letter: E
Question
E-7-4 - Please explain how you arrived at your answers. Thank you!
Exercise 7-4 Second-Stage Allocation [LO4]
Larner Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates:
Total Expected Activity
Determine the total overhead cost that would be assigned to each of the products. (Omit the "$" sign in your response.)
Exercise 7-4 Second-Stage Allocation [LO4]
Larner Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates:
Activity Cost Pool Activity Rates Supporting direct labor $9 per direct labor-hour Machine processing $3 per machine-hour Machine setups $40 per setup Production orders $150 per order Shipments $120 per shipment Product sustaining $775 per product Activity data have been supplied for the following two products:Total Expected Activity
J78 W52 Direct labor-hours 1,125 40 Machine-hours 2,600 30 Machine setups 11 1 Production orders 11 1 Shipments 22 1 Product sustaining 1 1 Required:Determine the total overhead cost that would be assigned to each of the products. (Omit the "$" sign in your response.)
Activity Cost Pool J78 W52 Supporting direct labor $ $ Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost $ $Explanation / Answer
Activity Cost Pool Total Expected Activity J78 Activity Cost ($) Total W52 Activity Cost ($) Total Supporting direct labor Direct labor-hours 1125 9 10125 40 9 $360 Machine processing Machine-hours 2600 3 7800 30 3 $90 Machine setups Machine setups 11 40 440 1 40 $40 Production orders Production orders 11 150 1650 1 150 $150 Shipments Shipments 22 120 2640 1 120 $120 Product sustaining Product sustaining 1 775 775 1 775 $775 Total Overhead Cost 23430 1535 Activity Cost Pool Total Expected Activity J78 Activity Cost ($) Total W52 Activity Cost ($) Total Supporting direct labor Direct labor-hours 1125 9 10125 40 9 $360 Machine processing Machine-hours 2600 3 7800 30 3 $90 Machine setups Machine setups 11 40 440 1 40 $40 Production orders Production orders 11 150 1650 1 150 $150 Shipments Shipments 22 120 2640 1 120 $120 Product sustaining Product sustaining 1 775 775 1 775 $775 Total Overhead Cost 23430 1535
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