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# Cost 6 - RS Company manufactures and distributes two...

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RS Company manufactures and distributes two products, R and S. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: Activity Cost Driver Amount R S Production setups Number of setups \$82,000 8 12 Material handling Number of parts \$48,000 56 24 Packaging costs Number of units \$130,000 \$80,000 \$50,000 \$260,000 What is the total overhead allocated to Product R using the current system? Answer Selected Answer: \$160,000 Correct Answer: \$160,000 Response Feedback: \$260,000/130,000 = \$2.00 per unit; \$2(80,000) = \$160,000 Question 2 2 out of 2 points Based on the information in question #1 what is the total overhead per unit allocated to Product S using activity-based costing (ABC)? Answer Selected Answer: \$2.27 Correct Answer: \$2.27 Response Feedback: (\$82,000/20)12 + (\$48,000/80)24 + (\$130,000/130,000)50,000 = \$113,600; \$113,600/50,000 = \$2.27 Question 3 2 out of 2 points

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Terri Martin Nerdmeister, CPA provides bookkeeping and tax services to her clients. She charges a fee of \$60 per hour for bookkeeping and \$90 per hour for tax services. Martin estimates the following costs for the upcoming year: Office Supplies \$16,000 Computer fees \$24,000 Secretary's salary \$30,000 Rent \$18,000 \$88,000 Operating profits declined last year and Ms. Martin has decided to use activity-based
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Cost 6 - RS Company manufactures and distributes two...

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