question archive The accountant for SCREEN Company which manufactures printers has established the following overhead cost pools and activity drivers
The accountant for SCREEN Company which manufactures printers has established the following overhead cost pools and activity drivers
Subject:BusinessPrice: Bought3
The accountant for SCREEN Company which manufactures printers has established the following overhead cost pools and activity drivers. They produce one basis printer ( XYZ) and a higher quality printer ( VIP ) with additional functionality and speed. The following information has been provided in respect of the overhead costs. Overhead cost pool Budgeted overhead Activity Driver Machine set-ups $120,000 Number of setups Material handling $65,000 Weight of raw material Waste control $25,000 Weight of raw material used Quality control $39,000 Number of inspections Inspection Other overhead costs $100,000 Machine hours 10,000 units of the XYZ are produced which have the following production requirements: Machine set-ups 2 set-ups Raw material 10,000 kilos Waste 3,000 kilos Inspections 3 inspections Machine hours 90 hours 4500 units of the VIP printer are produced, which have the following production requirements: Machine set-ups 4 set-ups Raw material 6,350 kilos Waste 2,000 kilos Inspections 10 inspections Machine hours 70 hours Required 1. If SCREEN used a single, predetermined overhead rate based on machine hours. Calculate the overhead rate per unit to be assigned to each model of printer 2. If SCREEN was to adopt Activity Based Costing use the table below to calculate i ) The total cost driver and allocation rate for each overhead cost pool ii ) The overhead cost allocation to each model ( XYZ and VIP) ini) The overhead cost per unit 3. Discuss the merits of an activity-based overhead costing system for SCREEN.
