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Chrome File Edit View History Bookmarks People Window Help 50%D Fri 1:22 PM QE ) MindTap - Cengage Learning ng.cengage.com/static/nb/ui/index.html?nbid=4351 39&nbNodeld;=151682573&eISBN;:9781337270724#!&parentld;=151682593 MINDTAP From Cengage (3) Desmond Balogun Chapter 18: Activity-Based Costing Financial and Managerial Accounting Chapter Contents EX 18-16 Single plantwide rate and activity-based costing Obj. 2, 4 Whirlpool Corporation conducted an activity-based costing study of its Evansville, Indiana, plant in order to identify its most profitable products. Assume that we select three representative refrigerators (out of 333): one low-, one medium-, and one high-volume refrigerator. Additionally, we assume the following activity-base information for each of the three refrigerators EXCEL TEMPLATE A Z REAL WORLD Number of Machine Setups Sales OrdersUnits Three Representative Refrigerators Number of Number of Number of Hours 24 225 900 38 Refrigerator-Low Volume Refrigerator-Medium Volume Refrigerator-High Volume 160 1,500 6,000 13 120 Prior to conducting the study, the factory overhead allocation was based on a single machine hour rate. The machine hour rate was $200 per hour. After conducting the activity-based costing study, assume that three activities were used to allocate the factory r choose Paste

Explanation / Answer

Solution-

Column A

Single Rate Overhead Allocation Per Unit

Column B

ABC Overhead Allocation Per Unit

Column C

Percentage Change in Allocation (Col. B-Col. A)/ Col. A

Workings-

1. Calculation of Cost per unit using Single rate overhead allocation-

Quantity(A)

Total Cost(C=A*B)

2. Calculation of Cost per unit using ABC Overhead allocation-

Machining

Machining

Machining

Product Volume Class

Column A

Single Rate Overhead Allocation Per Unit

Column B

ABC Overhead Allocation Per Unit

Column C

Percentage Change in Allocation (Col. B-Col. A)/ Col. A

Refrigerator- Low Volume $30 $58.06 93.5% Refrigerator- Medium Volume $30 $29.31 -2.3% Refrigerator- High Volume $30 $25.46 -15.1%

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