The Pikes Peak Leather Company manufactures leather handbags (H) and moccasins (
ID: 2446283 • Letter: T
Question
The Pikes Peak Leather Company manufactures leather handbags (H) and moccasins (M). The company has been using the factory overhead rate method but has decided to evaluate the activity based costing to allocate factory overhead. The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices.
Total Budgetted factory overhead cost = $360,000
Calculate the amount of factory overhead to be allocated to each unit using activity based costing. The factory plans to produce 60,000 handbags, and 40,000 moccasins. Round your answers to two decimal places, if necessary.
Handbags: $______Per unit
Moccasin: $______per unit
Products Cutting Direct Labor Hours Sewing Direct Labor Hours Set-Ups QC Inspections Purchase Orders Handbags 60,000 60,000 500 200 100 Moccasins 40,000 80,000 300 800 300 Total 100,000 140,000 800 1,000 400 Budget $40,000 $210,000 $80,000 $20,000 $10,000Explanation / Answer
Products
Products
Cutting Direct Labor Hours Sewing Direct Labor Hours Set-Ups QC Inspections Purchase Orders Handbags 60,000 60,000 500 200 100 Moccasins 40,000 80,000 300 800 300 Total 100,000 140,000 800 1,000 400 Budget 40,000 210,000 80,000 20,000 10,000 Rate /Unit of activity 0.40 1.50 100.00 20.00 25.00 Allocation of Overhead by ABC Cutting Direct Labor Hours Sewing Direct Labor Hours Set-Ups QC Inspections Purchase Orders Total Units Produced Units of Overhead /unit Handbags 24,000 90,000 50,000 4,000 2,500 170,500 60,000 2.84 Moccasins 16,000 120,000 30,000 16,000 7,500 189,500 40,000 4.74 Allocation of Overhead by ABC Overhead allocated $/Unit Handbags 2.84 Moccasins 4.74Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.