San Diego State University Operations And Supply Chain Management Assignment Help - Direct labor

Question - The cost accountant of ABC Manufacturing attended a workshop on activity-based costing and was
impressed by the results. After consulting with the production personnel, he prepared the following
information on cost drivers and the estimated volume for each driver.
Activity Cost driver Cost driver volume Total
Machining Ace Best Champ
Setup Number of setups 125 75 50 250
Machining Machine hours 2,500 1,500 2,000 6,000
Assembly
Assembly Direct labor hours 25,000 15,000 5,000 45,000
Inspection Number of inspections 50 25 25 100
The cost accountant also determined how much overhead costs were incurred in each of the four
activities as follows:
Activity Overhead costs
Machining
Setup $150,000
Machining 750,000
Total Machi ...Read More ning department overhead $900,000
Assembly
Assembly $360,000
Inspection 90,000
Total Assembly department overhead $450,000
Total overhead costs $1,350,000
Required:
a. Determine the cost driver rate for each activity cost pool.
b. Use the activity-based costing method to determine the unit cost for each product.
c. Summarize and comment the results.
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Sep 23 2013 08:58 AM ...Read Less

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