Purchase Solution

Activity Based Costing for Cordless Phone Manufacturing

Not what you're looking for?

Ask Custom Question

The cordless phone manufacturing division of a Denver-based consumer electronics company uses activity-based costing. For simplicity, assume that its accountants have identified only the following three activities and related cost drivers for indirect production costs:

Activity Cost Driver:
Materials handling, Direct materials cost
Engineering, Engineering change notices
Power, Kilowatt hours

Three types of cordless phones are produced: SA2, SA5, and SA9.
Direct costs and cost driver activity for each product for a recent month are as follows:
SA2 SA5 SA9
Direct materials cost $25,000 $50,000 $125,000
Direct labor cost $4,000 $1,000 $3,000
Kilowatt hours 50,000 200,000 150,000
Engineering change notices: 13 5 2

Indirect production cost for the month was
Materials handling $8,000
Engineering $20,000
Power $16,000
Total indirect production cost $44,000

a. How do I compute the indirect production cost allocated to each product with the activity based costing system?
b. Suppose all indirect production costs had been allocated to products based on direct labor costs. How do I compute the indirect production costs allocated to each product?

Purchase this Solution
Solution Summary

This solution looks at ABC (activity based costing) for a cordless phone manufacturing division.

Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

View More Free Quizzes
Related BrainMass Solutions

  • Traditional Costing / Activity Based Costing

    A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity-based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

  • Activity Costing

    556482 Activity Costing See the attachment. The purchasing department of a manufacturing firm has decided to apply its costs to jobs using an activity based costing system.

  • Activity-based costing

    A) Traditional costing systems allocate both manufacturing costs and non-manufacturing costs B) Activity-based costing systems allocate only manufacturing costs C) Activity-based costing systems allocate both manufacturing costs and non-manufacturing

  • Alternative Forms of Costing

    124898 Alternative Forms of Costing Compare and contrast the alternative forms of costing: - Activity based costing (ABC) - Traditional Product Costing - Variable Costing - Absorption Costing Activity Based Costing Activity-Based Costing

  • Milton Manufacturing Overhead Activity Based Costing

    e.Determine the total cost of the proposed job if activity-based costing is used. f.Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  • Traditional Costing vs. Activity Based Costing

    The company is considering replacing its traditional costing system for determining unit product costs for external reports with an activity-based costing system.

  • Activity Based Costing

    The solution computes cost based on Activity Based Costing for Pitney Corporation.

  • Unit product cost under absorption costing

    is the activity rate under the activity-based costing system for this activity?

  • Evaluation of Activity-Based Costing

    497854 Evaluation of Activity-Based Costing 1. Discuss differences between activity-based costing and the traditional costing systems. 2. Discuss the reasons that activity-based costing may be resisted by top management. 3.

View More Related Solutions