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FINC 577 Chapter 4 Notes Outline

Abc does segregate overhead into does various cost

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Unformatted text preview: verhead into does various cost pools to provide more accurate cost information. ABC, thus, supplements – it does not it replace replace – the traditional cost system. Chapter 4-12 ActivityActivity-Based Costing Atlas Atlas Company produces two automotive antitheft devices: The Boot: A high volume item with sales totaling 25,000 per year year. The Club: A low volume item with sales totaling 5,000 per year. Each product requires 1 hour of direct labor Total annual direct labor hours (DLH) 30,000 (25,000 + 5000). Direct labor cost $12 per unit for each product. Expected annual manufacturing overhead costs $900,000 $900 Direct materials cost: The The Boot - $40 per unit. The Club - $30 per unit. Chapter 4-13 Costing Under Traditional Costing Manufacturing Costs Direct Materials Direct Labor Overhead Total unit cost Products The Boot The Club Cl $40 $30 12 12 30 30* $82 $72 * Predetermined overhead rate: $900,000 ÷ 30,000 DLH = $30 per DLH Overhead = predetermined overhead rate times direct labor hours ($30 × 1 hr. = $30) Chapter 4-14 F...
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