Zwahlen Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. 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:Activity Cost Pools Processing$57,000?Setting Up$14,500?Other$29,100? MHsBatchesProduct D78600?500?Product H012,600?1100?Total21,200?1600?? Product D7Product H0Sales (total)$218,300?$304,100?Direct materials (total)$73,200?$145,800?Direct labor (total)$106,460?$96,800??Required:a.
Calculate activity rates for each activity cost pool using activity-based costing.Activity Cost PoolsActivity RateMachining?per MHSetting up?per batchb. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. ?Amount of Overhead CostProduct K0?Product W9?c. Determine the product margins for each product using activity-based costing.?Product MarginProduct K0?Product W9?
What will be an ideal response?
a.
| Activity Cost Pools | Activity Rate |
| Machining | $2.69? | per MH |
| Setting up | $9.06? | per batch |
| ? | Amount of Overhead Cost |
| Product K0 | $27,664? |
| Product W9 | $43,860? |
| ? | Product Margin |
| Product K0 | $10,976? |
| Product W9 | $17,640? |
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