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Unit Total OH Batch + Product + Facility Total OH = + / Total = OH x Weight
Driver $- / = #DIV/0! x # Units OH
Allocated = #DIV/0! / = #DIV/0! / OH/
Cost = ### + Total
Cost Price =
Cost = #DIV/0! #DIV/0! ABC:
Allocation Rate Unit
x Weight of Cost Driver
OH Allocated #DIV/0! + #DIV/0! Product
x x + $- + #DIV/0! = - = ### + $- = #DIV/0! #DIV/0! Undercosting #DIV/0! Rigsby Sporting Goods, Inc., produces indoor treadmills. The company allocates its overhead co
and cost drivers associated with the four overhead activity cost pools follow: Producing 5,000 units of PFT200, one of the company's five products, took 4,000 labor hours, 25
a. Had the company used labor hours as a companywide allocation base, how much overhead w
b. How much overhead is allocated to the 5,000 PFT200 units using activity-based costing?
c. Compute the overhead cost per unit for PFT200 using activity-based costing and direct labor h
product costs are $120 and PFT200 is priced at 20 percent above cost (rounded to the nearest w
price under each allocation system.
d. Assuming that activity-based costing provides a more accurate estimate of cost, indicate whet
Rigsby uses direct labor hours as the allocation base. Explain how over- or undercosting can affe e. Comment on the validity of using the allocated facility-level costs in the pricing decision. Shoul
pricing decision? If so, which ones? What costs would you include if you were trying to decide wh ...
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This note was uploaded on 02/22/2012 for the course BUAD 2050 taught by Professor Nicholasw.schroeder during the Spring '09 term at Toledo.
- Spring '09