Racer X Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and overhead cost information has been compiled:
Number of Number of Number of
Product Setups Components Direct Labor Hours
Standard 15 10 800
Deluxe 35 15 400
Overhead costs Set-up activity Inspection Activity
$50,000 $40,000
Racer X hopes to reduce the overhead costs associated with the setups in the long-run:
i) By reducing the cost of performing each set up by 10% and
ii) By reducing the setups for standard from 15 to 10 and for deluxe from 35 to 30.
What are the long-run expected savings at the setup activity pool from these process improvements?
$3,000 |
||
$14,000 |
||
$9,000 |
||
$5,000 |
Number of setups and number of components are identified as activity-cost drivers for the set-up activity and inspection activity, respectively. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the standard model?
$46,000 |
||
$35,000 |
||
$59,000 |
||
$31,000 |
Racer X Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The...
Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Setups Number of Components Number of Direct Labor Hours Product Standard Deluxe 18 14 215 Overhead costs $75,000 $87,400 Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model? $101,200 $61,200...
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