Rockford Company produces two different products, Product A and Product B. Rockford uses a traditional volume-based...

Rockford Company produces two different products, Product A and Product B. Rockford uses a traditional volume-based costing system in which direct labor hours are the allocation base. Rockford is considering switching to an ABC system by splitting its manufacturing overhead cost across three activity pools: Setup, Production, and Finishing. The cost of each activity and usage of the activity drivers are as follows:

	COST		Usage by Product A	Usage by Product B
Setup (Batches)		$68,000	330 batches	170 batches
Production (Direct Labor Hours)		$336,000	89,500 DL hours	51,000 DL hours
Finishing (Machine Hours)		$86,000	56 Machine hours	44 Machine hours

Rockford manufactures 10,000 units of Product A and 21,000 units of Product B per month.

Required:

a. Calculate the predetermined overhead rate under the traditional costing system. (Round your answer to 2 decimal places.)

b. Calculate the activity rate for Setup. (Round your answer to 2 decimal places.)

c. Calculate the activity rate for Production. (Round your answer to 2 decimal places.)

d. Calculate the activity rate for Finishing.

e. Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

f. Calculate the indirect manufacturing costs assigned to each unit of Product B under the traditional costing system. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

g. Calculate the indirect manufacturing costs assigned to each unit of Product A under the ABC system. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

h. Calculate the indirect manufacturing costs assigned to each unit of Product B under the ABC system. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Solutions

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ekkarill92 answered 1 year ago

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