Question

Matthew Company manufactures two models of​ pens, a standard model and a deluxe model. Three activities have been identified in the production of the pens. The following information is​ available:

Product Number of Setups Number of Components Number of Direct Labor Hours
Standard 22 8 375
Deluxe 28 12 225
Cost Pool Total Costs Cost Driver
Setup Costs ​ $15,000 Number of setups
Assembly Costs ​ $36,000 Number of components
Labor Costs ​ $9,000 Number of direct labor hours

If activity minusbased costing is​ used, the total costs assigned to the standard model are:__________

Answer 1

Total overhead to Standard 26,625

Step-by-step explanation:

first, we solve for the activity rates:

`\left[\begin{array}{ccccc}Activity&Driver&cost&Total&Rate\\$Setuo Cost&$setups&15000&50&300\\$Assembly Cost&$components&36000&20&1800\\$Labor Cost&$labor-hours&9000&600&15\\\end{array}\right]`

Then we apply these rates according to the use:

`\left[\begin{array}{cccc}Activity&Rate&Use&Allocateds\\Setup Cost&300&22&6600\\Assembly Cost&1800&8&14400\\Labor Cost&15&375&5625\\Total&&&26625 \\\end{array}\right]`

Answer 2

Activity based costing is a costing technique uin which cost are allocated to cost unit or cost centre based on the activity consumed by such cost centre or cost unit. cost are allocated based on the basis cost driver

cost ssigned to Standard Model

Set up cost = $300 *22 = $6,600

Assembly cost = $1,800 * 8 = 14,400

labour cost = $15 * 375 5,625

Total 13,665

Step-by-step explanation:

set up cost

cost per set up = $15,000/ 50 = $300

Assembly cost

cost per component = $36,000/20 = $1,800

Labour cost

labour cost per hour = $9,000/600 = $15