Question
In: Accounting
WHEN USING A TWO STAGE ACTIVITY- BASED COSTING SYSTEM, WHICH OF THE FOLLOWING IS NOT A...
WHEN USING A TWO STAGE ACTIVITY- BASED COSTING SYSTEM, WHICH OF THE FOLLOWING IS NOT A LEGITIMATE STEP?
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Expert Solution
Activity- based Costing System allocates the overhead to multiple cost pools and assigns the activity cost pools to products or services by means of cost drivers. The complex manufacturing processes may require multiple allocation bases and this approach is called Sctivity-based Costing System.
Activity-based Costing System allocates overhead costs in two stages:
Stage 1: Overhead costs are allocated to activity cost pools.
Stage 2: The overhead costs allocated to the cost pools is assigned to products using cost.
Basically, Activity-based Costing System involves the following steps:
1. Identify and classify the major activities and allocate manufacturing overhead costs to the appropriate cost pools.
2. Identify the cost driver that has a strong correlation to the costs in the Cost pool.
3. Compute the overhead rate for each pool.
4. Assign the overhead costs for each costs to products using the overhead rates.
ekkarill92 answered 2 years agoRelated Solutions
When switching from a traditional costing system to an activity based costing system that contains some...
When switching from a traditional costing system to an activity based costing system that contains some batch-level costs
the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase
the unit product costs of both high and low volume products typically decrease
the unit product costs of both high and low volume products typically increase
the unit product costs of high volume products typically ncrease and the unit product costs...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
82,000
Supervisory expense
$
12,100
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.30
0.10
Supervisory expense
0.60
0.20
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
30,000
Supervisory expense
$
14,800
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.50
0.40
0.10
Supervisory expense
0.50
0.30
0.20
In the...
Dodo Inc., uses activity-based costing to determine product margins. In the first stage, the activity-based costing...
Dodo Inc., uses activity-based costing to determine product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data pertinnent
to perform these allocations appears below:
Overhead costs:
Equipment depreciation
$
107,000
Supervisory expense
$
9,900
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.30
0.10
Supervisory expense
0.60
0.20
0.20
In...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
103,000
Supervisory expense
$
13,100
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.60
0.10
0.30
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$
92,000
Supervisory expense
$
4,000
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.20
0.20
Supervisory expense
0.30
0.20
0.50
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment
depreciation
$
73,000
Supervisory
expense
$
10,900
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment
depreciation
0.60
0.30
0.10
Supervisory
expense
0.60
0.20
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$ 110,000
Supervisory expense
$ 6,900
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost
Pools
Machining
Order Filling
Other
Equipment depreciation
0.40
0.30
0.30
Supervisory expense
0.40
0.20
0.40
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment depreciation
$ 95,000
Supervisory expense
$ 10,300
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost
Pools
Machining
Order Filling
Other
Equipment depreciation
0.60
0.30
0.10
Supervisory expense
0.60
0.20
0.20
In the...
Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing...
Doede Corporation uses activity-based costing to compute product
margins. In the first stage, the activity-based costing system
allocates two overhead accounts--equipment depreciation and
supervisory expense--to three activity cost pools--Machining, Order
Filling, and Other--based on resource consumption. Data to perform
these allocations appear below:
Overhead costs:
Equipment
depreciation
$
92,000
Supervisory
expense
$
4,000
Distribution of Resource Consumption Across Activity Cost
Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment
depreciation
0.60
0.20
0.20
Supervisory
expense
0.30
0.20
0.50
In the...
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