Question

Assigned Media Question Help o E4-24A (similar to) Camoy Products has adopted an ABC cooling system. The following manufacturing activities. Indirect manufacturing costs, and cost drivers have been identified: Click the icon to view the activity costs and drivers.) The Job Cost Record for Job 0624 revealed that direct materials requisitioned for the job totaled S1,040 The Job Cost Record also showed that direct labor for this job totaled 8 hours at a wage rate of $27 per hour Other data collected on the resources used by Job #624 included: Click the icon to view the other data) Read the requirements Requirement 1. Calculate the activity cost location rate for each of the five pools listed in the table. (Round the allocation rate to Requirements Activity cost Total activity cost pool Total activity allocation base allocation rate Machine setup 1. Calculate the activity cost a location rate for each of the five pool sted in per setup table 2 Calculate the total cost of Job 624 use an ABC costing system) Data Table 2. Why would ABC provide a more accurate allocation of marutacturing overhead (MOH) than a plantwiderate? 4. Assume that Carney Products used a traditional costing system rather than an ABC system is plantwide MOH rate would have been determined using director (DL) hours as the allocation base. How much cost datortion 1 machine stuproquired would have coured on this job? Enter any number in the edit fields and then click Check Answer machine hours polishing cloths Done remaining 4 quality control tests un 8 ports

Answer 1

1	Allocation of Activity Cost
		Total Activity Cost Pool	Total Activity Allocation Base	Activity Cost Allocation Rate
	Machine Setup	96000	2400 Set Ups	40
	Machining	290000	2000 Machine Hours	145
	Polishing	55000	5000 Polishing Cloths	11
	Quality Control	630000	7000 Test Run	90
	Facility Level Cost	192500	55000 DL Hours	3.5

2	Total Cost of Job #624 under ABC Costing Method
	Direct Material		1040
	Direct Labour		216
	Manufacturing OH		896
	: Machine Set Up	40
	: Machine Hours	435
	:Polishing Clothes	33
	: Quality Conttrol Input Runs	360
	:Facility Level Cost	28
	Total Cost of #624		2152

3	As it is Apparent that in ABC specifically require the activity utilisation by a single Job. And Accordingly allocate such cost as per Allocation rate , whereas in PlantWide rate the consumption rate per activity per job is difficult to determine.

4	If Using Traditional Method
	Total Manufacturing Cost
	Machine Setup	96000
	Machining	290000
	Polishing	55000
	Quality Control	630000
	Facility Level Cost	192500
	Total Cost	1263500
	Total Direct Labour Hours : 55000 Direct Labour Hours
	Hence Manufacturing OH is Total Cost / Toatl Direct Labour Hours
	Henc , MOH ( Traditional Method ) = 1263500 / 55000 = 22.97 $
Job #624	Analysis	Under ABC	Uner Traditional	Difference
	Direct Material	1040	1040	0
	Direct Labour	216	216	0
	Manufactruing OH	896	184	-712.24
	The Difference Showing will ultimately impact the pricing of the product and sales revenue also,
	Howevere, Wheerreas In ABC, the activity utilisation is allocated preoperly and properly shown the cost of the product under job 624. while in Traditinal Costing the activity utilisation concept is totally ignored.