PoseiDon Inc. (PDI) recently started operations to obtain a share of the growing golfing market....
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PoseiDon Inc. PDI recently started operations to obtain a share of the growing golfing market. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. The company was formed as a partnership by two professional engineers and a professional golfer, none of whom had any accounting experience. The business has been very successful, and to cope with the increased level of activity, the partners have hired a professional accountant as their controller. One of the first improvements the controller wants is an update of the costing system, changing from a single overhead application rate using direct labourhours to activitybased costing. The controller has identified the following three activities as cost drivers, along with the related cost pools: Model Number of Materials Requisitions Number of Product Inspections Number of Orders Shipped Thunderbolt Earthquake Total costs in the cost pool $ $ $ Required: Using ABC, prepare a schedule that shows the allocation of the costs of each cost pool for each model.
PoseiDon Inc. PDI recently started operations to obtain a share of the growing golfing market. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. The company was formed as a partnership by two professional engineers and a professional golfer, none of whom had any accounting experience. The business has been very successful, and to cope with the increased level of activity, the partners have hired a professional accountant as their controller. One of the first improvements the controller wants is an update of the costing system, changing from a single overhead application rate using direct labourhours to activitybased costing. The controller has identified the following three activities as cost drivers, along with the related cost pools:
Model Number of Materials
Requisitions Number of Product
Inspections Number of Orders
Shipped
Thunderbolt
Earthquake
Total costs in the cost pool $ $ $
Required:
Using ABC, prepare a schedule that shows the allocation of the costs of each cost pool for each model.
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