Activity-Based Cost

In: Business and Management

Submitted By chikisr
Words 754
Pages 4
Activity-Based Cost
Grisel Rosas
ACC/561
9/21/2015
Debra Luna

Activity-Based Cost
A. Activity Cost Pool Estimated Overhead Market Analysis $1,050,000 Product Design $2,350,000 Product Development $3,600,000 Prototype testing $1,400,000 Total $8,400,000
Activity Cost Pool Cost Drivers Expected Use of Cost Drivers per Activity
Market Analysis Hours of analysis 15000 Hours
Product Design Number of Designs 2500 Design
Product Development Number of Products 90 Products
Prototype testing Number of test 500 Test

Activity Cost Pool Activity-Based Overhead Rates
Market Analysis $70.00 per Hour
Product Design $940.00 per Design
Product Development $40,000.00 per product
Prototype testing $2,800.00 per test
B.
Activity Cost Pool | Cost Driver | Expected use of Cost Driver | X | Activity-Based Overhead Rates | Cost assigned | Market Analysis | Hour of analysis | 18000 | | $70 | $1,260,000 | Product Design | # of Design | 280 | | $940 | $263,200 | Product Development | # of Products | 10 | | $40,000 | $400,000 | Prototype testing | # of Test | 92 | | $2,800 | $257,600 |

C. Activity Cost Pool | Cost Driver | Expected use of Cost Driver | X | Activity-Based Overhead Rates | Cost assigned | Market Analysis | Hour of analysis | 800 | | $70 | $56,000 | Product Design | # of Design | 178 | | $940 | $167,320 | Product Development | # of Products | 3 | | $40,000 | $120,000 | Prototype testing | # of Test | 70 | | $2,800 | $196,000 |

D.

Benefits of activity-based costing
Ideal Manufacturing will greatly benefit by using the activity-based costing for its research and developing activities. The benefits of activity costing help eliminate the distortions that can occur in traditional overhead cost allocation. What…...

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