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Q1) Hutchings Company produces and distributes two products, A and K. Overhead costs are presently assigned using number of units produced as allocation base. Controller has changing to activity-based costing ABC. system. She has gathered the following information:

Activity Cost Driver Amount A K
Production setups Number of setups $164,000 16 24
Material Handling Number of parts 96,000 112 48
Packaging costs Number of units 260,000 160,000 100,000
    $520,000    

A. Compute the overhead cost per unit under present system?

B. Determine the total overhead assigned to each product using present system?

C. What would be total overhead assigned to each product under ABC costing?

D. What would be overhead cost per unit under ABC costing?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M918264

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