Question

Use the Following Information to Answer the Questions Below • Information for Our 2 TOP Products, the Mountain Bike and BMX Bike, are Shown Below: • We Need to Compare Traditional Costing to ABC Costing using the Information Below • Traditional Costing uses Direct Labor Hours as the Cost Driver for ALL of the Manufacturing Overhead Amounts • ABC Uses 3 Cost Pools to Allocate Overhead Amounts to Products and Jobs. • Round All Total Amounts to the Nearest Dollar and Round Per Unit or Per Hour Amounts to Nearest Penny. ESTIMATED Manufacturing Overhead Costs and ESTIMATED Cost Driver Amounts for the YEAR were as follows: 1. Machinery Costs = $200,000 based on Machine Hours 2. Assembly Costs = $500,000 based on Assembly Hours, 3. Other Factory Overhead Costs = $100,000 based on Direct Labor Hours. 4. Estimated Machine Hours = 5,000 Hours

Answer 1

Answer:

All the answers for questions 1-14 are correct.

question 15:

The single biggest reason for shift in costs is ASSEMBLY

Reason: Under ABC costing assembly manufacturing costs for mountain bike is 112500 and for BMX it is 187500 whereas under traditional costing system the entire manufacturing overhead cost itself which is 120000 lesser than the individual assembly manufacturing overhead under ABC.

Thank you.