BIG X1 Company, manufactures three different products, BIG1X, BIGZX, and BIG3X. Management has become concerned about the accuracy of Its costing...
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Please help with the question below about Activity-Based Costing (Financial Accounting).

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5. BIG X1 Company, manufactures three different products, BIG1X, BIGZX, and BIG3X. Management has become concerned about the accuracy of Its costing system. 10 M M w The company expected to produce and sellthe following units of each product: 1,000 2,000 5,000 Direct labor hours required to produce one unit of each product. 4.00 6.00 3.00 Overhead is applied to products on the basis of direct labor-hours. At the beginning of the current year, management estimated overhead costs of $580,000 Required: a. Compute the predetermined overhead rate using direct labor-hours as the basis for allocating overhead costs to products. (3 points) b. Compute the manufacturing overhead cost per unit of each product. (2 points) The company is considering using activity-based costing to cost its products. A team was formed to investigate this idea. The team recommends that three activity cost pools be used. These cost pools and their associated activities are listed as follows: Estimated Expected Activig for products Activity Cost Pool and (Activity Measure) Overhead C m m M Total Purchase orders (number of orders) $20,000 100 300 400 800 Product testing (number of tests) 220,000 1000 1,200 2,400 4,600 Machine-related (machine-hours) 340 000 1,200 2,500 4,500 8,200 $580,000 c. Compute the activity rate for each activity cost pool. (2 points) Using activity-based costing, do the following: d. Determine the total overhead that would be assigned to each product. (3 points) e. Compute the manufacturing overhead cost per one unit for each model. {2 points) f. Discuss at least two management decisions that would be impacted assuming the activity-based costing information provides more accurate costing than using the single rate as before. Mention specific products in your discussion. (4 points)

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The student who asked this found it Helpful
Overall rating 100%

"This is a very helpful answer. I have been working on it and have the same answer in most parts, except part B. Predetermined overhead rate x Actual direct labor hours for BIG1X 74.84 Predetermined overhead rate x Actual direct labor hours for BIG1X 112.26 Predetermined overhead rate x Actual direct labor hours for BIG1X 56.13 Thanks again!"

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