Spadaro Corporation has an activity-based costing system with three activity cos

Question

Spadaro Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Other. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:    

Activity cost pools

Processing 3,000

setting up 9,800

other 9,200

           Mh’s Batches

Products C0 5,800 700

Product C4 4,200 300

Total 10,000 1,000

Product C0

Sales (total) 45,300

Direct Materials(total) 19,600

Direct Labor (total) 15,900

Product C4

Sales (totals) 48,400

Direct Materials (totals) 16,900

Direct Labor (totals) 24,200

Required:

a. Calculate activity rates for each activity cost pool using activity-based costing.

b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

c. Determine the product margins for each product using activity-based costing.

Explanation / Answer

Processing setting up Overhead 3000 9800 Activity 10000 1000 cost per activity .3 per MH        [3000/10000] $9.8 Per batch C0 C4 Processing 1740     [5800*.3] 1260    [4200*.3] Setting up 6860     [700*9.8] 2940    [300*9.8] Total 8600 4200 C0 C4 Sales 45300 48400 Less:cost Direct material 19600 16900 Direct labor 15900 24200 Ovehead 8600 4200 Product margin 1200 3100

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.