In: Accounting
Cost allocation base | Indirect in cost | |
Product desgin | number of components | 107200 |
Machine set up | hour | 401620 |
Assembly | machine hour | 594080 |
Inspection | number of product | 160460 |
The accounting department has also compiled the following data by product line for 2020:
Simple | Regular | Deluxe | |
number component | 4 | 10 | 18 |
set up hour | 75 | 125 | 300 |
machine hour | 0.75 | 1.25 | 2 |
number of product | 1320 | 2650 | 7330 |
DM | 6 | 12 | 20 |
DL hour per unit | 2 | 3.5 | 5 |
DL cost per hour | 12 | 12 | 12 |
unit produced | 21040 | 26200 | 13335 |
Company DEF makes three types of widgets: Simple, Regular, and Deluxe. The company currently uses a traditional costing system with one indirect cost pool and machine hours as its allocation base; however, it is considering whether it should implement an activity-based costing (ABC) system in 2020. The accounting department has studied the indirect cost pool and developed the following cost pool data for use in an ABC system in 2020: