Weissman Corporation manufactures two products: Product E16S and Product P17K. T
ID: 2527961 • Letter: W
Question
Weissman Corporation manufactures two products: Product E16S and Product P17K. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products E16S and P17K. Total Activity Cost Pool Activity Measure Total Cost Activity Machining Machine setups Product desigrn General factory Machine-hours Number of setups Number of products Direct labor-hours $220,000 11,000 MHs $240,000 400 setups 2 products 74,000 $270,000 10,000 DLHs Activity Measure Product P17K Product E16S 7,000 Machine-hours Number of setups Number of products Direct labor- hours 4,000 270 130 3,000 7,000 Using the ABC system, the percentage of the total overhead cost that is assigned to Product E16S is closest toExplanation / Answer
Statement showing computations Particulars Amount a Activity Driver No of Activity b Cost per activity c= a/b No of Activity of E16S d Cost Allocated to E16S c*d No of Activity of P17K e Cost Allocated to P17K c*e Machining 220,000.00 Machine hours 11,000.00 20.00 7,000.00 140,000.00 4,000.00 80,000.00 Machine setups 240,000.00 No of setups 400.00 600.00 270.00 162,000.00 130.00 78,000.00 Product Design 74,000.00 Noof products 2.00 37,000.00 1.00 37,000.00 1.00 37,000.00 General Factory 270,000.00 DL Hours 10,000.00 27.00 3,000.00 81,000.00 7,000.00 189,000.00 Total Overhead 804,000.00 420,000.00 384,000.00 % of overhead cost that is assigned to product E16S is =420,000/804,000 52.24%
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