Sebastian Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining,Batch\[\begin{array} { | l | r | } \hline \text { Equipment depreciation (total) } & \$ 27,000 \\ \hline \text { Indirect labor (total) } & \$ 7,000 \\ \hline \end{array}\]

The Answer of Sebastian Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining,Batch\[\begin{array} { | l | r | } \hline \text { Equipment depreciation (total) } & \$ 27,000 \\ \hline \text { Indirect labor (total) } & \$ 7,000 \\ \hline \end{array}\]

Sebastian Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining,Batch\[\begin{array} { | l | r | } \hline \text { Equipment depreciation (total) } & \$ 27,000 \\ \hline \text { Indirect labor (total) } & \$ 7,000 \\ \hline \end{array}\]

The Answer of Sebastian Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining,Batch\[\begin{array} { | l | r | } \hline \text { Equipment depreciation (total) } & \$ 27,000 \\ \hline \text { Indirect labor (total) } & \$ 7,000 \\ \hline \end{array}\]

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Sebastian Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining,Batch

question 110

Essay

Sebastian Corporation's activity-based costing system has three activity cost pools-Machining,Batch Setup,and Other.The company's overhead costs,which consist of equipment depreciation and indirect labor,are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. $\begin{array} { | l | r | } \hline \text { Equipment depreciation (total) } & \$ 27,000 \\\hline \text { Indirect labor (total) } & \$ 7,000 \\\hline\end{array}$

$\begin{array}{|l|r|r|r|}\hline & \text { Machining } & \text { Batch Setup } & \text { Other } \\\hline \text { Equipment depreciation } & 0.40 & 0.30 & 0.30 \\\hline \text { Indirect labor } & 0.20 & 0.30 & 0.50 \\\hline\end{array}$
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Batch Setup cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. $\begin{array} { | l | r | r | } \hline & \text { MHs } & \text { Batches } \\\hline \text { Product Snorkel } & 8,100 & 400 \\\hline \text { Product Fin } &\underline{ 1,900} &\underline{ 1,600 }\\\hline \text { Total } & 10,000 & 2,000 \\\hline\end{array}$
Additional data concerning the company's products appears below:
$\begin{array} { | l | c | c | } \hline & \text { Product Snorkel } & \text { Product Fin } \\\hline \text { Sales (total) } & \$ 71,400 & \$ 57,600 \\\hline \text { Direct materials (total) } & \$ 21,900 & \$ 19,900 \\\hline \text { Direct labor (total) } & \$ 33,700 & \$ 25,100 \\\hline\end{array}$

Required:
a.Assign overhead costs to activity cost pools using activity-based costing.b.Calculate activity rates for each activity cost pool using activity-based costing.c.Determine the amount of overhead cost that would be assigned to each product using activity-based costing.d.Determine the product margins for each product using activity-based costing.

Definitions:

F-ratio

The F-ratio, in the context of an ANOVA test, measures the ratio of variance between groups to the variance within groups, used to identify significant differences between means.

Critical Value

A critical value is a point on a statistical distribution that represents a cutoff used to determine the likelihood of observing a statistic as extreme as, or more extreme than, the observed value.

One-way ANOVA

A statistical test used to determine if there are statistically significant differences between the means of three or more independent (unrelated) groups based on one independent variable.

F-ratio

A statistical measure used in analysis of variance (ANOVA) to determine the degree of variation between sample means in comparison to variation within the samples.