Question

Goodwin Co. manufactures two products: R and W. The company uses activity-based costing to apply manufacturing...

Goodwin Co. manufactures two products: R and W. The company uses activity-based costing to apply manufacturing overhead costs to products. The cost pools and related estimated overhead costs for 20x3 were as follows:
Activity Cost Pool
Activity measure
Overhead cost
Purchase orders
Number of purchase orders
$34475
Assembly
Number of direct labour hours
152143

The expected activity measures for the manufacturing product R in 20x3 were: 228 purchase orders and 4560 direct labour hours. The expected activity measures for the manufacturing of product W in 20x3 are: 439 purchase orders and 7365 direct labour hours.
During 20x3, Goodwin Co. produces 14461 units of product R with a total unit product cost of $46.18. The company’s direct labour rate is $12/hour.   
What is the total direct materials cost used in the production of R in 20x3?

Select one:
a. $0
b. $597846
c. $543126
d. $-11750
Business   Accounting   
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Homework Answers

Answer #1
Activity rate
Activity    Total OH Cost Activity
drivers rate
Purchase order 34,475 667 51.7 per order
Assembly 1,52,143 11925 12.76 Per DLH
Oh cost allocated to Product R
Activity Rate Drivers OH cost
Purchase order 51.7 228 11787.6
Assembly 12.76 4560 58185.6
Total Overheads cost 69973.2
Unit Product cost 46.18
Multiply: Units produced 14461
Total Product cost 667809
Less: Direct labor cost (4560*12) 54720
Less: Overheads cost allocated 69973
Material cost 543116
Answer is c. $ 543,126
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