Carter,Inc

question 84

Essay

Carter,Inc.produces two different products,Product A and Product B.Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base.Carter is considering switching to an ABC system by splitting its manufacturing overhead cost of $1,000,000 across three activities: Design,Production,and Inspection.Under the traditional volume-based costing system,the predetermined overhead rate is $2.50/direct labor hour.Under the ABC system,the rate for each activity and usage of the activity drivers are as follows:
Required:
a.Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system.
b.Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system.
c.Calculate the indirect manufacturing costs assigned to Product A under the ABC system.
d.Calculate the indirect manufacturing costs assigned to Product B under the ABC system.
e.Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC?

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Definitions:

Zone Of Proximal Development

A concept in educational psychology referring to the difference between what a learner can do without help and what they can achieve with guidance and encouragement from a skilled partner.

Task Independently

The ability to perform or complete tasks without the assistance or supervision of others.

Assistance

The act of helping or providing support to others, often to overcome difficulties or achieve certain tasks.

Acquisitive Stage

According to Schaie, the first stage of cognitive development, encompassing all of childhood and adolescence, in which the main developmental task is to acquire information.