Computation of Activity Based usage | ||||||
Tennis Racquet | Badminton Racquet | Total | ||||
Unit level | 14700 | 13300 | 28000 | inspection hours | ||
Batch level | 76 | 46 | 122 | setups | ||
Product level | 4 | 1 | 5 | TV commercial | ||
Facility level | 31400 | 37600 | 69000 | machine hours | ||
Computation of ABC rate | ||||||
Activity | OH Costs(Col 1) | No. of activity base(Col 2) | Activity Rate(Col 1 / Col 2) | |||
Unit level | $ 8,40,000 | 28,000 | $ 30.00 | per inspection hours | ||
Batch level | $ 3,41,600 | 122 | $ 2,800.00 | per setups | ||
Product level | $ 1,52,500 | 5 | $ 30,500.00 | per TV commercials | ||
Facility level | $ 5,52,000 | 69,000 | $ 8.00 | per machine hours | ||
Allocation of Overhead Costs | ||||||
Tennis Racquet | Badminton Racquet | |||||
Activity Based usage | Activity Based usage*ABC rate | Activity Based usage | Activity Based usage*ABC rate | |||
Unit level | 14700 | $ 4,41,000.00 | 13300 | $ 3,99,000.00 | ||
Batch level | 76 | $ 2,12,800.00 | 46 | $ 1,28,800.00 | ||
Product level | 4 | $ 1,22,000.00 | 1 | $ 30,500.00 | ||
Facility level | 31400 | $ 2,51,200.00 | 37600 | $ 3,00,800.00 | ||
Total Overhead Cost allocated | $ 10,27,000.00 | $ 8,59,100.00 | ||||
Production | 70500 | 30800 | ||||
Overhead Cost per racquet | $ 14.57 | $ 27.89 | ||||
Computation of Product Cost per unit | ||||||
Tennis Racquet | Badminton Racquet | |||||
Direct materials | $ 18.10 | $ 13.60 | ||||
Direct labor | $ 32.00 | $ 26.90 | ||||
Overhead Costs | $ 14.57 | $ 27.89 | ||||
Product Cost per unit | $ 64.67 | $ 68.39 | ||||
Price of Badminton Racquest =$68.39*1.30 =$88.91 | ||||||
Adams Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the...
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