147) Duquesne Incorporated recently implemented an activity-based costing system. Total : 1876956
147) Duquesne Incorporated recently implemented an activity-based costing system. Total results from all products manufactured in the current year are:
Activity cost poolTotal costTotal activity
Packaging$3,150450number of orders
Quality control inspections$900200number of inspections
Duquesne manufactures sprinkler heads for commercial applications. Annual production and sales of one of its heads, is 2,300. The following relates to the most recent year.
Annual machine hours1,000
Annual number of orders125
Annual number of inspections400
Direct materials cost per unit$15.00
Direct labor cost per unit$5.00
1. Calculate the activity cost pool rates for each of the three activity cost pools listed.
2. Calculate the average cost of one sprinkler head.
148) Darlington & Myrtle, Attorneys at Law, provide a variety of legal services. The law firm uses an activity-based costing system and has developed the following activity pool cost rates:
Cost and activity data related to two clients is as follows:
Client 245 Client 367
Number of paralegal hours3879
Number of cases filed41
Number of documents1840
a. Calculate the amount of overhead that would be allocated to Client 245 using the activity-based costing system.
b. Calculate the amount of overhead that would be allocated to Client 367 using the activity-based costing system.
149) Columbia Corporation manufactures two products: Tricycles and Wagons. The annual production and sales of Tricycles is 2,200 units, while 1,750 units of Wagons are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Tricycles require 2 direct labor hours per unit, while Wagons require 1.5 direct labor hours per unit. The total estimated overhead for the period is $385,125. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools:
a. Calculate the unit cost for a Wagon using the traditional system based on a single plantwide overhead rate (use direct labor hours as the cost driver).
b. Calculate the unit cost for a Wagon using the activity-based costing system.