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Category > Accounting Posted 20 Aug 2017 My Price 13.00

Sweet Sugar Company

Activity-based  product  costing

Sweet Sugar Company manufactures three products (white sugar, brown sugar, and pow- dered sugar) in a continuous production process. Senior management has asked the con- troller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:

 

Activity                                                                                                 Budgeted Activity Cost

 

 

Production

$500,000

Setup

144,000

Inspection

44,000

Shipping

115,000

Customer service

    84,000

 

__

__

 

Total                                                                                                                $887,000

The activity bases identified for each activity are as    follows:

 

Activity                                                                                            Activity Base

 

Production                                                              Machine hours

Setup                                                                           Number of setups

Inspection                                                                Number of inspections

Shipping                                                                   Number of customer orders

Customer service                                               Number of customer service requests

The activity-base usage quantities and units produced for the three products were determined from corporate records and are as     follows:

 

 

 

Machine Hours

 

Number of Setups

 

Number of Inspections

Number of Customer Orders

Customer Service Requests

 

 

Units

White sugar

5,000

85

220

1,150

60

10,000

Brown sugar

2,500

170

330

2,600

350

5,000

Powdered sugar

  2,500

195

    550

2,000

190

  5,000

Total                                 10,000                     450                       1,100                             5,750                               600                   20,000

 

Each product requires 0.5 machine hour per unit.

Instructions

1.     . Determine the activity rate for each activity.

2.     .  Determine the total and per-unit activity cost for all three products. Round to two decimal places.

3.     .                      Why aren’t the activity unit costs equal across all three products since  they require the same machine time per unit?

Answers

(5)
Status NEW Posted 20 Aug 2017 10:08 AM My Price 13.00

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