Question

gested S Score: 0 of 3 pts 3 of 3 (2 complete) HW Score: 62.22%, 5.6 of 9 p count P4-43A (similar to) Question Help Wallace Pharmaceuticals manufactures an over-the-counter allergy medication Wallace's controller, Susan Driessler, has just returned from a conference on ABC called Breathe. Wallace is trying to win market share from Sudafed and Tylenol. She asks Kevin Yeng, supervisor of the Breathe product line, to help her develop The company has developed several different Breathe products tailored to specific an ABC system. Driessler and Yeng identify the following activities, related costs, markets. For example, the company sells large commercial containers of 1,000 and cost allocation bases: capsules to health-care facilities and travel packs of 20 capsules to shops in (Click the icon to view the information.) airports, train stations, and hotels rk Read the requirements Test Requirement 1. Determine the formula, then compute the cost allocation rate for each activity. (Round your answers to the nearest whole dollar. Abbreviations used: Mat.=Materials, QA=Quality assurance) Activity cost allocation rate Requirements Cost allocation base (actual) Cost allocation base (estimated) Estimated indirect activity cost Total assets Total hours Total liabilities Total owners' equilty Total plantwide overhead Total revenues 1. Compute the cost allocation rate for each activity. 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit) 3. The company's original single-allocation-based cost system allocated indirect costs to products at $300 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. Choose from any drop-down list and then click Check Print Done 10 parts remaining

Answer 1

Answer :-

• Requirement 1

	Indirect Cost	Allocation base	No. of allocation base	Cost Allocation Rate [ANSWER]
Material Handling	$                                 190,000.00	kilos	19,000	kilos	$ 10.00	per kilos
Packaging	$                                 400,000.00	machine hours	2,000	hours	$ 200.00	per hours
Quality Assurance	$                  112,500.00	samples	2,250	samples	$ 50.00	per samples
	$                                 702,500.00

• Requirement 2

COMMERCIAL CONTAINER ALLOCATION
	Cost Allocation Rate	No. of allocation base	Amount of Indirect cost allocated
Material Handling	$ 10.00	per kilos	8,000	$ 80,000.00
Packaging	$ 200.00	per hours	1,200	$       240,000.00
Quality Assurance	$ 50.00	per samples	200	$         10,000.00
Total Indirect cost Allocated	$       330,000.00
No. of units	2,500
Indirect Cost of each unit	$                 132.00

TRAVEL PACK ALLOCATION
	Cost Allocation Rate	No. of allocation base	Amount of Indirect cost allocated
Material Handling	$ 10.00	per kilos	6,000	$         60,000.00
Packaging	$ 200.00	per hours	400	$         80,000.00
Quality Assurance	$ 50.00	per samples	300	$         15,000.00
Total Indirect cost Allocated	$       155,000.00
No. of units	50,000
Indirect Cost of each unit	$                    3.10

• Requirement 3

Working		Commercial Container	Travel Pack
A	No. of machine hours	1,200	400
B	Overhead rate	$                                         300.00	$                        300.00
C = A x B	Amount of Indirect cost allocated	$                                 360,000.00	$                120,000.00
D	Units	2,500	50,000
E = C/D	Indirect cost per unit	$                                         144.00	$                             2.40

• Requirement 4

	Commercial Container	Travel Pack
Cost per unit as per ABC Method	$                                           132.00	$                             3.10
Cost per unit as per original system	$                                         144.00	$                             2.40