Question

Groleau Corporation has an activity-based costing system with three activity cost pools--Processing. Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity based costing system appear below: Factory utilities total) Indirect labor (total) $34,800 $12,400 Distribution of Resource Consumption Across Activity Cost Pools Factory utilities Indirect labor Processing 0.20 0.40 Setting Up Other 0.50 0.30 0.50 0.10 Product SB Product 11 Total MHS 3,100 7.100 10,400 Batches 1,200 1.100 2,300 Sales (total) Direct materials (total) Direct labor (total) Product 58 $75,400 $27,600 $29,700 Product 1 $99.500 $ 35,600 $ 42,700

Answer 1

,960 ,960 1,920 Settingup Other 17,400 10,440 6,200 1,240 23,600 11,680 Total 34,800 12,400 47,200 1 a) Processing Factory utilites 6 Indirect labor1 4 Total 1 b) Activity cost ppols Activity rate Processing Setting up 1.15 per MH 10.26 per batch C) Product 58 product F1 Amount of overhead cost 15,866 1 9,654 Product Margin d) Product s8 product F1 2,234 1,546

A Settingup Other Total =0.5*34800 =0.3*34800 -SUM(B2:D2) =0.5*12400 =0.1.12400 -SUM(B3:03) -SUM(C2:03) -SUM(D2:03) -SUM(B4:04) 1 a) Processing 2 Factory utilites |-0.2.34800 3 Indirect labor =0.412400 4 Total -SUM(B2:B3) 5 b) 6 Activity cost ppols Activity rate 7 Processing =B4/10400 8 Setting up =C4/2300 per MH Iper batch 10 C) 11 Product 58 12 product F1 Amount of overhead cost =(3100*B7)+(1200*B8) =(7300*B7)+(1100*B8) 13 d) 15 Product 58 16 product F1 Product Margin =75400-27600-29700-B11 =99500-35600-42700-B12