View the step-by-step solution to:

Question

Your company has been using direct labor costs as the basis for assigning overhead to its many products. Under

this allocation system product A has been assigned overhead of $19.92 per unit while product B has been assigned $11.86 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:


Screen Shot 2020-01-25 at 11.46.31 AM.png

Screen Shot 2020-01-25 at 11.46.31 AM.png

Cost Pools Activity Costs Cost Driver Driver Consumption Machine setup $ 284,000 Setup hours 4,000
Materials handling 75,000 Pounds of materials 15,000
Electric power 26,000 Kilowatt-hours 26,000 '— The following cost information pertains to the production of A and B, just two of its many products: A B
Number of units produced 5,000 10,000
Direct materials cost $25,000 $33,000
Direct labor cost $28,000 $39,000
Number of setup hours 100 100
Pounds of materials used 1,000 2,000
Kilowatt—hours 2,000 2,000 l—

Top Answer

detailed solution provided... View the full answer

222.PNG

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question