Time Remaining 1 hour 11 minutes 4 seconds01:11:04 Item 6Item 6 Time Remaining 1 hour 11 minutes 4 seconds01:11:04 Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 30% of direct-labor cost, and direct labor totaled $861,000 for the quarter just ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection, in-process inspection, and final product certification. Number of parts, number of units, and number of orders have been selected as the respective cost drivers. The following data show the pool rates that have been calculated by the company along with the quantity of driver units for the Dragon’s:
Required:
Calculate the quarterly quality-control cost that is allocated to the Dragon product line under Whitman’s traditional-costing system.
Calculate the quarterly quality-control cost that is allocated to the Dragon product line if activity-based costing is used.
Does the traditional approach under- or overcost the product line? By what amount?
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Time Remaining 1 hour 11 minutes 4 seconds01:11:04 Item 6Item 6 Time Remaining 1 hour 11...
Whitman Enterprises uses a traditional-costing system to estimate quality-control costs for its Dragon product line. Costs are estimated at 50% of direct-labor cost, and direct labor totaled $868,000 for the quarter just ended. Management is contemplating a change to activity-based costing, and has established three cost pools: incoming material inspection, in-process inspection, and final product certification. Number of parts, number of units, and number of orders have been selected as the respective cost drivers. The following data show the pool...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 16 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $97,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Cost Driver Pool Rates Quantity of Driver for Satin Sheen Incoming...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 15 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $96,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Cost Driver Pool Rates Quantity of Driver for Satin Sheen Incoming...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 14.5 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $27,500. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Incoming material inspection In-process inspection Product certification Cost Driver Type of material...
cks, 50 Saved Help Save & Exit Urban Elite Cosmetics has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 18 percent of direct labor cost. Monthly direct-labor cost for Satin Sheen makeup is $99.000. In an attempt to more equitably distribute quality control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup Activity Cost Pool Incoming material...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 17 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $98,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. 1 Quantity of Driver for Satin Sheen 23 types Cost Driver Type of material Nunber...
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Exercise 4-11 (Part Level Submission) Health 'R Us, Inc., uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products. To meet Food and Drug Administration requirements and to assure its customers of safe, sanitary, and nutritious food, Health 'R Us engages in a high level of quality control. Health 'R Us assigns its quality-control overhead costs to all products at a rate of 17% of direct labor costs. Its direct labor cost for...
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