Question

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic. Expected Costs $625,000 900,000 Activity Handling materials Inspecting product Processing purchase orders Paying suppliers Insuring the factory Designing packaging Expected Activity 100,000 parts 1,500 batches 105,000 700 orders 175,000 500 invoices 300,000 40,000 square feet 75,000 2 models Assume that the following information is available for the company's two products for the first quarter of 2017. Basic Model 30,000 units 30,000 parts Deluxe Model 10,000 units 20,000 parts Production volume Parts required Batches made 250 batches 100 batches Purchase orders 50 orders 20 orders 50 invoices 10,000 sq. ft. 1 model 10 invoices 7,000 sq. ft 1 model Invoices Space occupied Models

Answer 1

Deluxe Activity Handling materials Inspecting product Processong orders Paying supplies Insuring factory Designing packaging Expected Costs 625,000 900,000 105,000 175,000 300,000 75,000 Expected Activity 100,000 1,500 700 500 4,000 Activity Rate=Expected Cost driver quantity Costs/Expected Activity incurred 6.25 per parts 20,000 600 per batch 250 150 per order 50 350 per invoice 75 per square fool 10,000 37500 per model Total overhead Production volume OH cost per unit=Total overhead/Production volume OH Allocated 125,000 150,000 7,500 17,500 750,000 37,500 $ 1,087,500 10,000 21 108.75 Activity Handling materials Inspecting product Processong orders Paying supplies Insuring factory Designing packaging Expected Costs 625,000 900,000 105,000 175,000 300,000 75,000 Expected Activity 100,000 1,500 700 500 4,000 Activity Rate=Expected Cost driver quantity Costs/Expected Activity incurred 6.25 per parts 30,000 600 per batch 1,000 150 per order 20 350 per invoice 10 75 per square fool 7,000 37500 per model Total overhead Production volume OH cost per unit=Total overhead/Production volume OH Allocated 187,500 600,000 3,000 3,500 525,000 37,500 $ 1,356,500 30,000 2 45.22