The Controller for Shutterbug Photographic Supply Has Established the Following

question 11

Essay

The controller for Shutterbug Photographic Supply has established the following cost pools and cost drivers:
A.Determine the order's target price by using the activity-cost pools.
B.Assume that Halifax used a single,combined overhead rate based on weight of raw materials.
1.Determine the predetermined overhead rate.
2.Determine the expected cost of the order.
3.Determine the target price.
C.The activity-based approach ("A")makes more specific use of the order's characteristics (and cost drivers).While this order would represent 32% of the expected direct materials usage,the order would require only 8% of the setups,0% of the hazardous waste,0.4% of the inspections,and 2% of the machine hours.No overhead application method based on any single variable can reflect all this diversity in resource consumption.
C.Which approach above ("A" or "B")seems to be a more reasonable method to establish target prices? Explain.

---

Definitions:

Quality Objectives

Goals that relate to the consistency and excellence of a product or service, usually defined in a company's quality management system.

Quality Control

The processes and measures implemented to ensure that products or services meet specified quality standards.

High Standards

The practice of setting and adhering to elevated expectations or benchmarks, often aimed at achieving superior quality or performance.

Rigorous Assessment

A thorough and detailed evaluation process, often used to measure performance, skills, or knowledge.