Flanigan Manufacturing uses an activity-based cost system. The company produces Product R and Product X. Information concerning the two products is as follows:
The following costs are reported:
Required:
a.
Classify the overhead activities as:
•
Unit-level activities
•
Batch-level activities
•
Product-sustaining activities
b.
Calculate the following:
•
The pool rate for power
•
The pool rate for setups
•
The pool rate for engineering
c.
Calculate the following:
•
Power costs assigned to Product X
•
Setup costs assigned to Product R
•
Engineering costs assigned to Product R
Definitions:
Trade-In Allowance
The value offered for an old item when it is traded for a new item, reducing the purchase price of the new item.
Book Value
Book Value refers to the net value of a company or an asset calculated by total assets minus intangible assets (patents, goodwill) and liabilities, used to estimate the value of a company on its balance sheet.
Commercial Substance
A characteristic of transactions that indicates a change in future cash flows as a result of economic activities, leading to a real economic impact.
Asset Improvements
Expenditures made to increase the useful life, efficiency, or productive capacity of an asset, typically capitalized and amortized over time.
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