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XYZ manufactures a line of high-end exercise equipment of commercial quality. Assume that the chief accountant has proposed changing from a traditional costing system to an activity-based costing system. The financial vice president is not convinced, so she requests that the next large order for equipment be costed under both systems for purposes of comparison and analysis. An order from Slim-Way Salons, Inc., for 150 low-impact treadmills is received and is identified as the order to be subjected to dual costing. The following cost data relate to the Slim-Way order. Data relevant for both costing system: Direct Materials 30,000 Direct labor hours 950 Direct labor rate per hour 18 In the traditional costing system, the predetermined overhead rate is 300% of direct labor hours.
XYZ manufactures a line of high-end exercise equipment of commercial quality. Assume that the chief accountant has proposed changing from a traditional costing system to an activity-based costing system. The financial vice president is not convinced, so she requests that the next large order for equipment be costed under both systems for purposes of comparison and analysis. An order from Slim-Way Salons, Inc., for 150 low-impact treadmills is received and is identified as the order to be subjected to dual costing. The following cost data relate to the Slim-Way order. Data relevant for both costing system: Direct Materials 30,000 Direct labor hours 950 Direct labor rate per hour 18 In the traditional costing system, the predetermined overhead rate is 300% of direct labor hours.
Materials Direct labor hours 30,000 950 Direct labor rate per hour 18 In the traditional costing system, the predetermined overhead rate is 300% of direct labor hours. Activity Cost Pools Engineering design Machine setup Machining Assembly Packaging and shipping Building occupancy Compute the total cost of the Slim-Way Salons, Inc. order under the ABC costing system. (Write your answer as a value only, e.g., 5,000 or 5000) Answer: Jump to... : Data relevant to the a Cost Drivers Engineering hour Setups Machine hours Number of subassemblies Packaging/shippir hours Machine hours Next page Quiz2 grades-On paper ▸
ivity-based costing system Activity-Based Expected Use of Cost Drivers Overhead Rate for Treadmill Order $30 per hour 330 22 $200 per setup $25 per hour $8 per 732 1,500 $15 per hour 152 $6 per hour 732 subassembly