Question

Musich Corporation has an activity-based costing system with three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below Activity Cost Pools Machining Setting Up Other Total S 9200 S 48,200 S 23,600 $ 81,000 Equipment depreciation Indirect labor Total 4200 2800 4000 11,000 S 13,400 S 51,000 S 27,600 S 92,000 Costs in the Machining 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 appear below: MHs Batches Product Z3 Product T1 Total 5900 6100 12,000 700 1300 Product Z3 Product T1 Sales (total) Direct materials (total) Direct labor (total) S 228,800 $ 254,500 $ 83,500 97,400 $ 109,800 $ 104,700

Answer 1

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL
			Activity	Total	Expected	Activity
ACTIVITY COST POOL			Measures	Overheads	Activity	Rate
machining			MH	13400	12000	1.12
Setting up			batches	51000	2000	25.5
			Product Z3		Product T1
Activity		Rate	Driver	Cost	Driver	Cost
Machining		1.12	5900	6608	6100	6832
Setting up		25.5	700	17850	1300	33150
		Total Overheads		24458		39982
Total c ost:
		Product Z3	Product T1
Material		83500	97400
labour		109800	104700
Overheads		24458	39982
Total cost		217758	242082
Profit Margin:
		Product Z3	Product T1
Sales		228800	254500
Less: Total Cost		217758	242082
Profit Margin		11042	12418