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Exercise 17-17 (Algo) Using activity-based costing to allocate overhead, compute product cost and gross profit LO P3
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.
able[[,Activity,Budgeted Cost,Activity Cost Driver, able[[Budgeted],[Activity],[Usage]]],[ able[[Process],[Assembly]], able[[Machining],[Setups]], able[[$311,200
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Exercise 17-17 (Algo) Using activity-based costing to allocate overhead, compute product cost and gross profit LO P3
Ice Cool produces two different models of air conditioners.The activities, costs,and cost drivers associated with the production processes follow.
Budgeted Activity Usage 7,400 120
Process Assembly
Activity Machining Setups
Budgeted Cost Activity Cost Driver $311,200 Machine hours (MH) 22,000 Setups $333,200 $220,000 Inspections $136,000 Purchase orders
Finishing Support
Inspecting Purchasing
760 450
Additional production information concerning its two models follows
Units and Activities Units produced Machine hours Setups Inspections Purchase orders
Model X 1,600 2,400 40 460 300
Model Z 3,200 5,000 80 300 150
Per Unit
Model X $415 150 125
Model Z $395 105 150
Selling price per unit Direct materials cost per unit Direct labor cost per unit
1.Compute the activity rate for each activity using activity-based costing. 2.Using activity-based costing,compute the overhead cost per unit for each model 3.Compute the total product cost per unit for each model. 4.For each model,compute the gross profit per unit(selling price per unit minus product cost per unit)
