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

question 100

Essay

Farris Corporation's activity-based costing system has three activity cost pools-Machining,Batch Setup,and Other.The company's overhead costs have already been allocated to these cost pools as follows:
$$\begin{array} { | l | r | } \hline \text { Machining } & \$ 15,200 \\\hline \text { Batch Setup } & \$ 44,800 \\\hline \text { Other } & \$ 16,000 \\\hline\end{array}$$
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.The following table shows the machine-hours and number of batches associated with each of the company's two products:

$$\begin{array} { | l | r | r | } \hline & \text { MHs } & \text { Batches } \\\hline \text { Product Sea } & 2,000 & 800 \\\hline \text { Product Air } & \underline { 8,000 } & \underline { 200 }\\\hline \text { Total } & 10,000 & 1,000 \\\hline\end{array}$$
Additional data concerning the company's products appears below:
$$\begin{array} { | l | r | r | } \hline & \text { Product Sea } & \text { Procuct Ari } \\\hline \text { Sales (total) } & \$ 220,700 & \$ 165,500 \\\hline \text { Direct materials (total) } & \$ 78,600 & \$ 83,100 \\\hline \text { Direct labor (total) } & \$ 89,600 & \$ 58,000 \\\hline\end{array}$$
Required:
a.Calculate activity rates for each activity cost pool using activity-based costing.b.Determine the amount of overhead cost that would be assigned to each product using activity-based costing.c.Determine the product margins for each product using activity-based costing.

---

Definitions:

Cervical

(1) Pertaining to the neck portion of the spinal column; (2) also to the entrance into the uterus.

Intraepithelial Lesion

A term describing early changes in the cells of the skin and some mucous membranes that may develop into cancer, usually found in the context of cervical cancer screening.

Epithelial Cell Abnormalities

Irregularities in the cells lining the surfaces of organs and structures in the body, which can indicate disease or cancer.

Gynecology

A branch of medicine that focuses on the health and diseases of the female reproductive system, as well as related issues in other bodily systems.