Question

Chapter 7 In-Class Case Vontungein Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts - equipment depreciation and supervisory expense - to three activity cost pools - Machining, Order Filing, and Other. Allocation is based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation. Supervisory expenses $64,000 $4,000 Distribution of resource consumption across activity cost pools: Activity Cost Pools Order Filling 0.30 0.10 Machining 0.50 0.10 Equipment depreciation Supervisory expense Other 0.20 0.80 In the second stage, Machining costs are assigned to products using machine hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the "Other" activity cost pool are not assigned to products. Activity: Product 16 Product E9 Total MHs (Machining) 7,600 12,400 20,000 Orders (Order Filling) 600 400 1,000 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine predstavni

Answer 1

Other Data from the Given Information Particulars Equipment Depreciation Supervisory Expenses Total $ Amount ($) 64,000 $ 4,000 $ 68,000 Machining 50% 10% Order Filling 30% 10% 20% 80% Total 100% 100% Requirement 1 | Assign Overhead Costs to Activity Cost Pools Particulars Amount ($) Machining Order Filling Equipment Depreciation $ 64,000 $ 32,000 $ 19,200 $ Supervisory Expenses $ 4,000 $ 400 $ 400 $ Total $ 68,000 $ 32,400 $ 19,600 $ Other 12,800 $ 3,200 $ 16,000 $ Total 64,000 4,000 68,000 Activity Drivers Activity Rate Requirement 2 | Calculation of Activity Rates Overhead Activity Cost Machining $ 32,400 Order Filling $ 19,600 Other $ 16,000 Total Overheads $ 68,000 20,000 Machine Hours 1,000 Orders NA NA $ $ 1.62 per Machine Hours 19.60 per Orders Requirement 3 | Assigning Overhead Costs Activity Activity Rate $ Machining Order Filling Total Overheads 1.62 19.60 Product 16 Base Amount 7,600 $ 12,312 600 $ 11,760 $ 24,072 Product E9 Base Amount 12,400 $ 20,088 $ 7,840 $ 27,928 $ 400 Requirement 4 | Calculation of Product Margin Particulars Product 16 Product E9 Sales $ 182,400 $ 147,800 Less : Costs Direct Materials $ 93,700 $ 46,800 - Direct Labor $ 52,700 $ 65,300 - Overheads $ 24,072 $ 27,928 Product Margin $ 11,928 $ 7,772