Chuang Corporation's Activity-Based Costing System Has Three Activity Cost Pools-Machining

question 39

Essay

Chuang Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other.The company's overhead costs have already been allocated to these cost pools as follows: 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.The following table shows the machine-hours and number of batches associated with each of the company's two products: Additional data concerning the company's products appears 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:

Methanol

A simple alcohol with the formula CH3OH, used as a solvent, antifreeze, fuel, and as feedstock for the production of chemicals.

Major Organic Products

Primary substances formed as a result of organic reactions, often the focus of synthesis goals.

Major Product

The compound that is formed in the greatest yield in a chemical reaction, as predicted by the reaction mechanism.

Reaction

A process in which substances interact to form one or more new substances with different properties.