ACTG 2020 Study Guide - Cost Driver, Fixed Cost, Cost Estimate

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emeraldcat522

16 Oct 2011

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Activity-based costing (abc) systems: follow a two-stage procedure to assign overhead costs to products. First stage identifies significant activities in the production of the three products and assigns overhead costs to each activity in accordance with the cost of the organization"s resources used by the activity. The overhead costs assigned to each activity make up an activity-cost pool. Stage two identifies cost drivers appropriate for each cost pool. Using pool rates, the overhead costs are allocated from each activity cost pool to each product line in proportion to the amount of the cost driver consumed by the product line: cost levels: Unit level: this type of activity must be done for each unit of production. Batch level: these activities must be performed for each batch of products, rather than each unit. I. e. setup, purchasing, material handling, quality assurance, packing/shipping activity cost pools.

Related Questions

Weber Industries has three activity cost pools and two products.It expects to produce 3,000 units of Product BC113 and 1,400 ofProduct AD908. Having identified its activity cost pools and thecost drivers for each pool, Weber accumulated the following datarelative to those activity cost pools and cost drivers.

Annual Overhead Data					Expected Use of Cost Drivers per Product
Activity Cost Pool	Cost Drivers	Estimated Overhead		Expected Use of Cost Drivers per Activity	Product BC113	Product AD908
Machine set-up	Set-ups	$	18,630	41	26	15
Machining	Machine hours		110,160	4,830	966	3,864
Packing	Orders		29,570	510	153	357

a.Prepare a schedule showing the calculations of theactivity-based overhead rates per cost driver.

b.Prepare a schedule assigning each activityâs overhead cost tothe two products.

c. Calculate the overhead cost per unit for each product.

yellowtiger910

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 47,000 Supervisory expense $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.10 0.30 Supervisory expense 0.60 0.20 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product C9 6,900 200 Product U0 3,100 800 Total 10,000 1,000 What is the overhead cost assigned to Product C9 under activity-based costing?

$21,942
$23,122
$26,500
$1,180

violetgoat484

Benoist Corporation has an activity-based costing system withthree activity cost pools-Machining, Setting Up, and Other. Thecompany's overhead costs have already been allocated to the costpools and total $17,200 for the Machining cost pool, $7,700 for theSetting Up cost pool, and $52,100 for the Other cost pool.

Costs in the Machining cost pool are assigned to products based onmachine-hours (MHs) and costs in the Setting Up cost pool areassigned to products based on the number of batches. Costs in theOther cost pool are not assigned to products. Data concerning thetwo products and the company's costs appear below:

Required:

a. Calculate activity rates for each activity cost pool usingactivity-based costing.
b. Determine the amount of overhead cost that would be assigned toeach product using activity-based costing.
c. Determine the product margins for each product usingactivity-based costing.

ultramarineporpoise156

ACTG 2020 Study Guide - Cost Driver, Fixed Cost, Cost Estimate

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