Reference no: EM131774639
Use the following information to complete questions 25 through 28:
AB Company manufactures and distributes two products, Alpha and Beta. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
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Activity
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Cost Driver
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Estimated Overhead Amount
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Estimated No. of Cost Driver Activities
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Rate
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Purchasing Materials
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Pounds
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$96000
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80
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$1200 per lb
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Production Setups
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No. of setups
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$164000
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20
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$8200 per setup
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Packaging
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No. of units
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$260000
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130,000
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$2 per unit
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$520000
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At the end of the period, the AB Company collected the following information about the actual number of activity events for each of the two products:
Alpha Beta
Purchased materials 56 24
Production setups 8 12
Packaging 80,000 50,000
Units produced 80,000 50,000
What is the total overhead allocated to Alpha using the current system?
A. $200,000
B. $260,000
C. $292,800
D. $320,000
What is the total overhead allocated to Beta using the current system?
A. $200,000
B. $260,000
C. $292,800
D. $320,000
What is the total overhead per unit allocated to Beta using activity-based costing?
A. $4.54
B. $5.20
C. $4.00
D. $3.66
What is the total overhead per unit allocated to Alpha using activity-based costing?
A. $4.54
B. $5.20
C. $4.00
D. $3.66
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