Question

Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity- based costing system appear below: Factory utilities (total) Indirect labor (total) $35,500 $15,200 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities Indirect labor 0.10 0.40 0.50 0.20 0.40 0.40 Batches MHs 3,000 Product S8 Product F1 1,100 1,000 7,700 10,700 2,100 Total Product S8 Product F1 $70,300 $23,700 $34,100 $ 98,800 $ 34,800 $ 43,300 Sales (total) Direct materials (total) Direct labor (total)

Answer 1

(@ Assigning owerhead lost pool. to activity Lost J Others. Factary Indisew utilities Labor Setting Processing -up 14200 3550 17750. 60806080 | 3040 TOTAL (A) 20280963020790 Cost drives (B) 0 10700 2100 mis Batchs (bActivity Rates (A:B) 11.8953 14.5857| (C) Overhead costs allocated to produits 58 'Processing setting up. TOTAL 5686 5044 10730 14594 4586 19180. d) 58 70300 98800 Sales 6 Costs Direet material Direct labor Overhead (23700 (34100) (10730) (34800 (43300) (19180) product margin product margin 1770 2:518 1520 1.538% I

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