Question

Vintage Fun reproduces old - fashioned style roller skates and skateboards. The annual production and sales of roller skates is 900 units, while 1,700 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 4.5 direct labor hours per unit, while skateboards require 3.25 direct labor hours per unit. The total estimated overhead for the period is $114,100. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity - based costing system, it would have the following three activity cost pools: Expected activity Activity cost pool Setup costs Engineering costs Maintenance costs Estimated overhead cost $6,150 $16,400 $91,550 Roller skates 395 480 2.275 Skateboards 320 610 2.198 Total 715 1,090 4.473 The cost pool activity rate for Engineering Costs would be closest to (Round all answers to two decimal places.) O A. $20.47 per engineering hour. B. $8.60 per engineering hour. C. $7.46 per engineering hour. OD. $15.05 per engineering hour.

Answer 1

Question No (1) Cost Pool Activity Rate For Engineering Costs Would be: 16400/(1090) $ 15.05 Per Engineering Hour Option (D) is Correct Question No (2) Activities Material Handling Mixing Packaging Maintenance Estimated Overhead Costs Estimated Activity Activity Rate $ 250,000 2500 Batches $ 100.00 Per Batche $ 115,000 3680 Batches $ 31.25 Per Batche $ 70,000 3500000 Units $ 0.02 Per Unit $ 15,000 260 Setups $ 57.69 Per Setup Compute the overhead Cost : Material Handling Mixing Packaging Maintenance $ $ $ $ 500.00 156.25 100.00 57.69 Allocated Cost $ 813.94 Option (C) is Correct Note : Do comment for any further assistance