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In: Accounting

Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product...

Lakeside Inc. manufactures four lines of remote control boats and uses activity-based costing to calculate product cost.

Activity Cost Pools Estimated Total Cost Estimated Cost Driver
Machining $ 330,000 12,100 machine hours
Setup 75,000 380 batches
Quality control 94,000 760 inspections

Suppose the Luxury boat requires 4,050 machine hours, 205 inspections, and 58 batches. Using activity proportions, determine the amount of overhead assigned to the Luxury product line. (Round your intermediate calculations to the nearest whole percentage and your final answer to the nearest whole number.)

Solutions

Expert Solution

Step-1:Calculate activity rate
Activity Cost Pools Estimated Total costs Estimated cost driver Activity rate
a b a/b
Machining $                  3,30,000 $                    12,100 machine hours $       27.27 per machine hour
Setup $                     75,000 $                        380 batches $      197.37 per batch
Quality Control $                     94,000 $                        760 inspections $      123.68 per inspection
Step-2:Calculate Overhead cost assignment of Luxury Boat
Activity Cost Pools Estimated cost driver x Activity rate = Estimated Total costs
Machining                          4,050 $                     27.27 $   1,10,455
Setup                               58 $                    197.37 $      11,447
Quality Control                             205 $                    123.68 $      25,355
$   1,47,257
Thus, Overhead Assignment to Luxury Boat is   $                 1,47,257

ekkarill92 answered 2 years ago
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