Question

Alliance, Inc. produces tables (sales of 200,000 units per year) and chairs (sales of 25,000 units...

Alliance, Inc. produces tables (sales of 200,000 units per year) and chairs (sales of 25,000 units per year). If Alliance switches from traditional costing to activity-based costing, what is the likely effect on overhead assigned to the two products?

need unique answer

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Under traditional overhead allocation, only one type of activity will consider like machine hours, labor hours, etc. for allocation of overhead.

But under Activity based costing system, different activities will consider for allocation i.e. Set ups, labor hours, machine hours, etc. for allocation.

Due to these reasons, after change of system from Traditional system to ABC System, overhead allocated to two products will definitely change based on which product involved more activities & less activities.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. A company manufactures two products, chairs and tables. Data regarding the two product is as...
1. A company manufactures two products, chairs and tables. Data regarding the two product is as follows:                         Direct labor hours per unit       Annual production Chairs                        .50 hours                           5,000 units Tables                        .80 hours                            4,000 units Chairs require $40.00 in direct materials per unit and tables require $50 per unit. The direct labor wage rate is $30 per hour. The activity-based costing system has the following activity cost pools: Activity cost pool          Activity Measure       Estimated overhead cost          Activity                                                                                                                  Chairs    Tables                   ...
1 A company makes two products: tables and chairs. While performing a multi-product Cost-Volume-Profit Analysis for...
1 A company makes two products: tables and chairs. While performing a multi-product Cost-Volume-Profit Analysis for this company, you noticed that break-even sales INCREASED due to A a decrease in the total fixed cost. B a decrease in the variable cost per unit for tables. C a decrease in the selling price per unit for tables. D an increase in the selling price per unit for chairs. 2 A company makes two products: tables and chairs. While performing a multi-product...
For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $200000 and 4000 inspections. The...
For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $200000 and 4000 inspections. The actual overhead cost for that cost pool was $280000 for 5000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is $40 per inspection. $56 per inspection. $50 per inspection. $70 per inspection. Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20000 units annually. Planter is a low-volume item totaling...
Smythe Co. makes furniture. The following data are taken from its production plans for the year....
Smythe Co. makes furniture. The following data are taken from its production plans for the year. Direct labor costs $ 5,780,000 Hazardous waste disposal costs 615,000 Chairs Tables Expected production 210,000 units 9,000 units Direct labor hours required 258,000 DLH 16,200 DLH Hazardous waste disposed 500 pounds 300 pounds Required: 1. Determine the hazardous waste disposal cost per unit for chairs and for tables if costs are assigned using a single plantwide overhead rate based on direct labor hours. 0...
Lloyd and Harry, Inc. is a manufacturer of briefcases. The company produces and sells two products:...
Lloyd and Harry, Inc. is a manufacturer of briefcases. The company produces and sells two products: Leather and Vinyl. Currently, the company uses a traditional costing system to allocate manufacturing overhead to production based on a predetermined manufacturing overhead rate of $100 per machine hour. Management is considering switching to activity based costing to improve costing accuracy. In their analysis of manufacturing overhead, management has identified two activities and cost pools: Product Inspection and Machining. 80% of the total budgeted...
Digital Storage Concept Inc. is considering a change to activity-based product costing. The company produces two...
Digital Storage Concept Inc. is considering a change to activity-based product costing. The company produces two products, cell phones and tablet PCs, in a single production department. The production department is estimated to require 3,830 direct labor hours (dlh). The total indirect labor is budgeted to be $344,700. Time records from indirect labor employees revealed that they spent 20% of their time setting up production runs and 80% of their time supporting actual production. The following information about cell phones...
ABC Inc. produces a single product and manufactured 20,000 units and sold 10,000 units last year....
ABC Inc. produces a single product and manufactured 20,000 units and sold 10,000 units last year. ABC had a practical production capacity of 20,000 units per year. The company budgeted the following overhead costs for the year: Indirect Factory Wages: $140,000 Factory Utilities: $ 50,000 Factory Depreciation: $ 10,000 Direct manufacturing costs per unit are $100. The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity...
Sunland Inc. has conducted the following analysis related to its product lines, using a traditional costing...
Sunland Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs. Total Costs Products Sales Revenue Traditional ABC Product 540X $200,000 $53,000 $47,100 Product 137Y 162,000 48,000 29,000 Product 249S 92,000 25,000 49,900 For each product line, compute operating income using the traditional costing system. Product 540X $enter a dollar amount Product 137Y...
Hickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The...
Hickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labour-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z: Activity Cost Pool       Activity Measure        Estimated Overhead Cost      Expected Activity Machining             Machine-hours        $ 200,000                       10,000 MHs Machine setups Number...
Jake Inc manufactures two products: A and B. The annual production and sales of Product A...
Jake Inc manufactures two products: A and B. The annual production and sales of Product A is 500 units and of Product B is 1,000 units. The company currently uses Direct Labor Hours as the basis for applying all Manufacturing Overhead to products. Product A requires 0.4 Direct Labor Hours per unit and Product B requires 0.2 Direct Labor Hours per unit (direct labor is $20 per hour). Also, direct materials is $5 for Product A and $10 for Product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT