Sweet Sugar Company manufactures three products (white sugar, brown sugar, and p
ID: 2545433 • Letter: S
Question
Sweet Sugar Company manufactures three products (white sugar, brown sugar, and powdered sugar) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows Activity Production Setup inspection Shlpplng Customer service Budgeted Activity Cost $453,600 114,000 106,500 140,500 78,400 $393,200 Total The activity bases identified for each activity are as follows: Activity Production Setup Inspection Shipping Customer service Number of customer service requests The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows: Activity Base Machine hours Number of setups Number of inspections Number of customer orders Customei Number of Number of Number of Service Units Setups Inspections Customer Orders Machine Hours 3,170 2,020 2,010 7,200 Requests whe sugar Brown sugar Powdered sugar 20 110 110 300 260 390 650 1,300 740 2,040 920 3,700 70 7,925 440 5,050 190 5,025 700 18,000 Total Each product requlres 0.9 machlne hour per unit.Explanation / Answer
Answer 1
Calculation of activity rte for each activity
Answer 2
Working Note : Calculation of total acivity cost & per unit acivity cost of all the 3 products
Activity Base
(A)
80 * $380 per setup
= $30,400
110 * $380 per setup
= $41,800
110 * $380 per setup
= $41,800
260 * $82 per move =
$21,320
650 * $82 per move
= $53,300
70 *$112 per test run
= $7,840
440 *$112 per test run = $49,280
Answer 3
The unit costs are different becuse the products consume many activities in ratio different from the Volume
Activity Working [Activity cost / Cost Driver] Activity rate Production $453,600 / 7,200 hrs $63 per machine hr Setup $114,000 / 300 $380 per setup Inspection $106,600 / 1,300 $82 per move Shipping $140,600 / 3,700 $38 per cust.ord Customer Service $78,400 / 700 $112 per test runRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.