The Oscuro Chocolate Company uses activity-based costing (ABC).The controller identified two activities and their budgetedcosts:
Setting Up Equipment $108,000
Other Overhead$360,000
Setting up equipment is based on set up hours, and otheroverhead is based on oven hours. Oscuro produces two products,Fudge and Cookies. Information on each product is as follows:
Fudge Cookies
Units produced 2,000 10,000
Set Up hours1,600400
Oven hours 400 2,000
1. Calculagte the activity rate for (a) setting up equipment,(b) other overhead
2. How much total overhead is assigned to Fudge using ABC?
3. What is the unit overhead assigned to Fudge using ABC?
4. Now, ignoring the ABC resutls, claculate the plantwideovehead rate, based on oven hours
5. How much total overhead is assigned to Fudge using theplantwide overhead rate?
6. Explain why the total overhead assigned to Fudge is differentunder ABC system (i.e. using the acgtivity rates) than under thenon-ABC system (i.e. using the plantwide rate)
The Oscuro Chocolate Company uses activity-based costing (ABC).The controller identified two activities and their budgetedcosts:
Setting Up Equipment $108,000
Other Overhead$360,000
Setting up equipment is based on set up hours, and otheroverhead is based on oven hours. Oscuro produces two products,Fudge and Cookies. Information on each product is as follows:
Fudge Cookies
Units produced 2,000 10,000
Set Up hours1,600400
Oven hours 400 2,000
1. Calculagte the activity rate for (a) setting up equipment,(b) other overhead
2. How much total overhead is assigned to Fudge using ABC?
3. What is the unit overhead assigned to Fudge using ABC?
4. Now, ignoring the ABC resutls, claculate the plantwideovehead rate, based on oven hours
5. How much total overhead is assigned to Fudge using theplantwide overhead rate?
6. Explain why the total overhead assigned to Fudge is differentunder ABC system (i.e. using the acgtivity rates) than under thenon-ABC system (i.e. using the plantwide rate)
Related questions
The Sabroso Chocolate Company uses activity-based costing (ABC).The controller identified two activities and their budgetedcosts:
| Setting up equipment | $270,000 |
| Other overhead | $900,000 |
Setting up equipment is based on setup hours, and other overheadis based on oven hours.
Sabroso produces two products, Fudge and Cookies. Information oneach product is as follows:
| Fudge | Cookies | ||||
| Units produced | 5,000 | 25,000 | |||
| Setup hours | 4,000 | 1,000 | |||
| Oven hours | 1,000 | 5,000 | |||
Required:
1. Calculate the activity rate for (a) settingup equipment and (b) other overhead.
| a. Setting up equipment | $ per setup hour |
| b. Other overhead | $ per oven hour |
2. How much total overhead is assigned to Fudgeusing ABC?
$
3. What is the unit overhead assigned to Fudgeusing ABC? Round to the nearest cent.
$per unit
4. Now, ignoring the ABC results, calculate theplantwide overhead rate, based on oven hours.
$ per oven hour
5. How much total overhead is assigned to Fudgeusing the plantwide overhead rate?
$
Hickory Company manufactures two productsâ13,000 units ofProduct Y and 5,000 units of Product Z. The company uses aplantwide overhead rate based on direct labor-hours. It isconsidering implementing an activity-based costing (ABC) systemthat allocates all of its manufacturing overhead to four costpools. The following additional information is available for thecompany as a whole and for Products Y and Z: |
| Activity CostPool | ActivityMeasure | Estimated Overhead Cost | Expected Activity | ||
| Machining | Machine-hours | $ | 242,400 | 12,000 | MHs |
| Machine setups | Number of setups | $ | 114,400 | 220 | setups |
| Productiondesign | Number of products | $ | 86,000 | 2 | products |
| General factory | Direct labor-hours | $ | 302,400 | 14,400 | DLHs |
| ActivityMeasure | Product Y | Product Z |
| Machine-hours | 7,200 | 4,800 |
| Number ofsetups | 40 | 180 |
| Number ofproducts | 1 | 1 |
| Directlabor-hours | 8,200 | 6,200 |
1. Using the ABC system, how much total manufacturing overheadcost would be assigned to Product Y?(Do not roundintermediate calculations and round your final answer to thenearest dollar amount.)
2. Using the ABC system, how much total manufacturing overheadcost would be assigned to Product Z? (Do not roundintermediate calculations and round your final answer to thenearest dollar amount.)
3. Using the plantwide overhead rate, whatpercentage of the total overhead cost is allocated to Product Y andProduct Z? (Round your intermediate calculations to 2decimal places. Round your "Percentage" answers to 2 decimalplaces. (i.e. 0.1234 should be entered as 12.34).)
4. Using the ABC system, how much totalmanufacturing overhead cost would be assigned to ProductY?(Do not round intermediate calculations and round yourfinal answer to the nearest dollar amount.)
5. Using the ABC system, what percentage of the Machining costsis assigned to Product Y and Product Z?(Round yourintermediate calculations to 2 decimal places. Round your"Percentage" answers to 2 decimal places. (i.e. 0.1234 should beentered as 12.34).)
5. Using the ABC system, what percentage ofMachine Setups cost is assigned to Product Y and ProductZ?(Round your intermediate calculations to 2 decimalplaces. Round your "Percentage" answers to 2 decimal places. (i.e.0.1234 should be entered as 12.34).)
6. Using the ABC system, what percentage of theProduct Design cost is assigned to Product Y and Product Z?(Round your answers to 2 decimal places.)
7. Using the ABC system, what percentage of theGeneral Factory cost is assigned to Product Y and Product Z?(Round your intermediate calculations to 2 decimal places.Round your "Percentage" answers to 2 decimal places. (i.e. 0.1234should be entered as 12.34).)
Hickory Company manufactures two productsâ14,000 units ofProduct Y and 6,000 units of Product Z. The company uses aplantwide overhead rate based on direct labor-hours. It isconsidering implementing an activity-based costing (ABC) systemthat allocates all of its manufacturing overhead to four costpools. The following additional information is available for thecompany as a whole and for Products Y and Z: |
| Activity CostPool | ActivityMeasure | Estimated Overhead Cost | Expected Activity | ||
| Machining | Machine-hours | $ | 203,000 | 10,000 | MHs |
| Machine setups | Number of setups | $ | 121,900 | 230 | setups |
| Productiondesign | Number of products | $ | 87,000 | 2 | products |
| General factory | Direct labor-hours | $ | 379,500 | 12,000 | DLHs |
| ActivityMeasure | Product Y | Product Z |
| Machine-hours | 7,300 | 2,700 |
| Number ofsetups | 50 | 180 |
| Number ofproducts | 1 | 1 |
| Directlabor-hours | 9,500 | 2,500 |
|
12. Using the ABC system, what percentage of the Machining costsis assigned to Product Y and Product Z? (Round yourintermediate calculations to 2 decimal places. Round your"Percentage" answers to 2 decimal places. (i.e. 0.1234 should beentered as 12.34).) 13. Using the ABC system, what percentage of Machine Setups costis assigned to Product Y and Product Z? (Round yourintermediate calculations to 2 decimal places. Round your"Percentage" answers to 2 decimal places. (i.e. 0.1234 should beentered as 12.34).) 14. Using the ABC system, what percentage of the Product Designcost is assigned to Product Y and Product Z? (Round youranswers to 2 decimal places.) 15. Using the ABC system, what percentage of the General Factorycost is assigned to Product Y and Product Z? (Round yourintermediate calculations to 2 decimal places. Round your"Percentage" answers to 2 decimal places. (i.e. 0.1234 should beentered as 12.34).) | ||
