Super Speaker company makes two different grades of speakers for use with mobile
ID: 2430731 • Letter: S
Question
Super Speaker company makes two different grades of speakers for use with mobile devises, a Premium and a Standard. They have decided to implement an ABC system for analyzing the costs of the two different lines. After a cost study, the accounting team at Super Speaker came up with the following information:
Activity
Number of Setups
Estimated amount of allocation base equaled actual amount during the period.
Required: Compute the amount of indirect cost applied to the Premium speakers.
Activity
Cost Allocation Base Setups $52030Number of Setups
Machine Maintenance $36551 Number of machine hoursExplanation / Answer
Computation of the overhead rate under ABC (Total indirect cost applied to be applied) A B C D E F= D+E G = C/F H = D x G I = E x G Consupmtion of Cost Driver Overhead under ABC Activity Cost Driver Cost Standard Premium Total Activity Cost per Activity Standard Premium Setups Number of Setups 52030.00 44.00 56.00 100 520.30 22893.20 29136.80 Machine Maintenance Number of Machine Hours 36551.00 1741.00 1130.00 2871 12.73 22164.85 14386.15 Total indirect cost applied to be applied 88581 45058.05 43522.95
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