Mccance Corporation Has an Activity-Based Costing System with Three Activity

question 70

Essay

Mccance Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs have already been allocated to the cost pools and total $28,000 for the Machining cost pool, $13,800 for the Setting Up cost pool, and $27,200 for the Other cost pool.
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs appear below: 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.

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Definitions:

Actual Reserves

The total amount of funds or commodities a bank holds at a given time, including both required and excess reserves.

Required Reserves

The minimum amount of funds that a bank is required to hold in reserve against deposits made by customers, as mandated by regulatory authorities.

Required Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, either in cash or as deposits with a central bank.

Checkable Deposits

Deposits in financial institutions that can be withdrawn by writing a check or using a debit card.