question archive The manufacturing division of an electronics company uses activity-based costing
The manufacturing division of an electronics company uses activity-based costing
Subject:AccountingPrice: Bought3
The manufacturing division of an electronics company uses activity-based costing. The company hasidentified three activities and the related cost drivers for indirect production costs.Activity Cost DriverActivity 1 Direct materials costActivity 2 Direct labor costActivity 3 Kilowatt hoursThree types of products are produced. Direct costs and cost-driver activity for each product for a monthare as follows:Product A Product B Product CDirect materials cost $75,000 $50,000 $125,000Direct labor cost $6,000 $1,000 $3,000Direct labor hours 1,000 500 1,500Kilowatt hours 150,000 200,000 150,000Indirect production costs for the month are as follows:Activity 1 $12,000Activity 2 20,000Activity 3 16,000Total $48,000Required:A) Compute the indirect production costs allocated to each product using the ABC system.B) Compute the indirect production costs allocated to each product using a traditional costing system.Assume indirect production costs are allocated to each product using the cost driver: direct labor hours.
