Fixed manufacturing overhead Fixed selling and administrativ. $34,400 $72,000 Us

Question

Fixed manufacturing overhead Fixed selling and administrativ. $34,400 $72,000 Use the following to answer questions 18 and 19 Simba Corporation manufactures three products. In the past, Simba has been using a traditional costing system in which manufacturing overhead was applied using a predetermined overhead rate of 150% of direct labor cost. Sensing the traditional costing system was distorting product costs; Simba is considering a switch to an activity-based costing system. Under activity-based costing, manufacturing overhead costs will be assigned to products using three activity Information on these cost pools for next year is as follows: cost pools. Activity Cost Pool Machine Setups Quality Control Production Estimated Overhead Cost $150,000 $180,000 $480,000 Expected Activity 400 Setups 1,500 Inspections 30,000 Machine hours Information on a per unit basis for the three products produced by Simba follows: Model #36 Model #58 Model #19 $400 $810 $540 $600 $310 $220 Direct material cost Number of setups Number of inspections Number of machine hours 10

Explanation / Answer

Qus 1.18

Ans (d)

Solution: material cost=540

Labour cost=. 600

Overhead=. 600*150%= 900

Total =. 2040

Qus1.19

Ans (c)

Solution: calculate cost drivers

Number of setup= 150000/400= 375

Qcontrol= 180000/1500= 120

Machine hr= 480000/30000= 16

Cost per unit

Material= 400

Labour= 810

Overhead= 375*2=750

=120*1= 120

= 16*4= 64

Total= 2144

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