Pretty Dog Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:ProductNumber of SetupsNumber of ComponentsNumber of Direct Labor HoursStandard 3 30 650Deluxe 7 50 150Overhead costs$30,000 $50,000 Assume a traditional costing system applies the overhead costs based on direct labor hours.Required:a. What is the total amount of overhead costs assigned to the standard model?b. What is the total amount of overhead costs assigned to the deluxe model?Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.c. What is the total amount of overhead costs assigned to the standard
model?d. What is the total amount of overhead costs assigned to the deluxe model?
What will be an ideal response?
a. Overhead rate: ($30,000 + 50,000)/(650 + 150) = $100/DLH: Std: $100 × 650 = $65,000.
b. Deluxe: $100 × 150 = $15,000.
c. Setups: $30,000/(3 + 7) = $3,000/Setup; Components: $50,000/(30 + 50) = $625/component; Std: ($3,000 × 3) + ($625 × 30) = $27,750.
d. Deluxe: ($3,000 × 7) + ($625 × 50) = $52,250.
You might also like to view...
Warehouse stock records are the formal accounting records for inventory
Indicate whether the statement is true or false
Path–goal theory is similar to the situational approach in that ______.
A. path–goal does not suggest leaders should be flexible B. path–goal does not take followers into consideration C. path–goal requires leaders to adapt to followers’ needs D. path–goal and situational both take the work setting into account
Elmo Inc, a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.
A) competition-based pricing B) cost-plus pricing C) target costing D) everyday low pricing E) high-low pricing
Porter has recommended three generic strategies: (a) Overall cost leadership, i.e., making units of a fairly standardized product and underpricing everybody else. (b) Differentiation, i.e., turning out something unique, an item whose quality, design, brand name, or reputation for service will command higher-than-average prices. (c) Focus, i.e., concentrating on a particular group of customers, geographic market, channel of distribution, or distinct segment of the product line.
What will be an ideal response?