Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 26 Sep 2017 My Price 8.00

Dino Dog Collars

Using activity-based costing to make decisions

Dino Dog Collars uses activity-based costing. Dino’s system has the following features:

Activity

Allocation Base

Cost Allocation Rate

Purchasing

Number of purchase orders

$65.00 per purchase order

Assembling

Number of parts

$ 0.36 per part

Packaging

Number of finished collars

$ 0.25 per collar

Each collar has 4 parts; direct materials cost per collar is $9. Direct labor cost is $4 per collar. Suppose Animal Hut has asked for a bid on 25,000 dog collars. Dino will issue a total of 150 purchase orders if Animal Hut accepts Dino’s bid.

Requirements

1. Compute the total cost Dino will incur to purchase the needed materials and then assemble and package 25,000 dog collars. Also compute the cost per collar.

2. For bidding, Dino adds a 40% markup to total cost. What total price will the company bid for the entire Animal Hut order?

3. Suppose that instead of an ABC system, Dino has a traditional product costing system that allocates indirect costs other than direct materials and direct labor at the rate of $9.60 per direct labor hour. The dog collar order will require 12,000 direct labor hours. What total price will Dino bid using this system’s total cost?

4. Use your answers to Requirements 2 and 3 to explain how ABC can help Dino make a better decision about the bid price it will offer Animal Hut.

Answers

Maurice Tutor
(5)
Status NEW Posted 26 Sep 2017 03:09 PM My Price 8.00

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