Snavely, Inc., manufactures and sells two products: Product E1 and Product A7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Expected Production | Direct Labor-Hours Per Unit | Total Direct Labor-Hours | |
Product E1 | 1,200 | 2.0 | 2,400 |
Product A7 | 400 | 1.0 | 400 |
Total direct labor-hours | 2,800 | ||
The direct labor rate is $23.60 per DLH. The direct materials cost per unit for each product is given below:
Direct Materials Cost per Unit |
|||
Product E1 | $248.00 | ||
Product A7 | $257.00 | ||
The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated | Expected Activity | |||||
Activity Cost Pools | Activity Measures | Overhead Cost | Product E1 | Product A7 | Total | |
Labor-related | DLHs | $ | 130,500 | 2,400 | 400 | 2,800 |
Machine setups | setups | 61,530 | 1,300 | 400 | 1,700 | |
Order size | MHs | 962,370 | 3,300 | 3,100 | 6,400 | |
$ | 1,154,400 | |||||
The total overhead applied to Product A7 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
A. $655,132
B. $192,030
C. $466,147
D. $499,267
Correct answer-----------D. $499,267
Working
Calculation of Activity rates | |||||
Activity Cost Pool | Activity driver | Overhead Cost (A) | Expected Activity (B) | Activity rate (A/B) | |
Labor related | Number of DLH | $ 130,500 | 2800 | $ 46.61 | Per DLH |
Production orders | Number of Order | $ 61,530 | 1700 | $ 36.19 | Per Order |
Order size | Number of MH | $ 962,370 | 6400 | $ 150.37 | Per MH |
.
Cost assigned to Product A7 | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Labor related | $ 46.61 | 400.00 | $ 18,644.00 |
Production orders | $ 36.19 | 400.00 | $ 14,476.00 |
Order size | $ 150.37 | 3,100.00 | $ 466147.00 |
Total Overheads assigned | $ 499,267.00 |
Snavely, Inc., manufactures and sells two products: Product E1 and Product A7. Data concerning the expected...
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