90.2K

Verified Solution

Link Copied!

PART A: Zoo Company makes two products. Basic and Deluxe. In the past, the company always used Traditional Costing. This year, it is ALSO going to calculate cost per unit using Activity-Based Costing. Relevant information for the current year is as follows: Basic Deluxe Yet to Allocate Direct material costs (traceable) $150,000 $300,000 Direct labor costs (traceable) $ 50,000 $100,000 Machining Activity Overhead $375,000 Setup Activity Overhead $120,000 Inspection Activity Overhead $105,000 Number of Units to be Made 50,000 units 100,000 units Machine Hours (related to machining) 25,000 hrs. 50,000 hrs. Number of Production Runs (related to setups) 50 runs 50 runs Inspection Hours (related to inspections) 1,000 hrs. 500 hrs. (NOTE: The instructor video lecture and related outline handout for this week might be helpful in doing this assignment.) REQUIRED: (#1) Since the company has three activities, what are the three overhead application rates the company would use for activity-based costing? (Be sure to label the rates appropriately.) (#2) Using activity-based costing, what was the cost to manufacture one Basic unit? (#3) Using activity-based costing, what was the cost to manufacture one Deluxe unit? (#4) Based on what you learned about activity-based costing this week, how might Zoo Company's managers use the new cost information from its activity-based costing system to better manage its business

Answer & Explanation Solved by verified expert

See Answer