Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based CostingCaldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows: Activity Activity Pool Cost Activity Base Procurement $12,600 Number of purchase orders Scheduling 90,000 Number of production orders Materials handling 11,000 Number of moves Product development 50,000 Number of engineering changes Total cost $163,600 The estimated activity-base usage and unit information for two product lines was determined as follows: Number ofPurchase Orders Number ofProduction Orders Number ofMoves Number ofEngineering Change Orders Units Ovens 400 800 300 80 1,000 Refrigerators 300 400 200 120 500 Totals 700 1,200 500 200 1,500 a.Determine the activity rate for each activity cost pool. Procurement (per purchase order) $ Scheduling (per production order) $ Materials handling (per move) $ Product development (per engineering change order) $ b.Determine the activity-based cost per unit of each product. Ovens $ per unit Refrigerators $ per unit

Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based Costing Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The...

Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based Costing

Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The indirect labor can be traced into four separate activity pools, based on time records provided by the employees. The budgeted activity cost and activity-base information are provided as follows:

Activity	Activity Pool Cost	Activity Base
Procurement		$12,600	Number of purchase orders
Scheduling		90,000	Number of production orders
Materials handling		11,000	Number of moves
Product development		50,000	Number of engineering changes
Total cost		$163,600

The estimated activity-base usage and unit information for two product lines was determined as follows:

	Number of Purchase Orders	Number of Production Orders	Number of Moves	Number of Engineering Change Orders	Units
Ovens		400			800		300		80		1,000
Refrigerators		300			400		200		120		500
	Totals		700			1,200		500		200		1,500

a.Determine the activity rate for each activity cost pool.

Procurement (per purchase order)	$
Scheduling (per production order)	$
Materials handling (per move)	$
Product development (per engineering change order)	$

b.Determine the activity-based cost per unit of each product.

Ovens	$ per unit
Refrigerators	$ per unit

Jun 01, 2022

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Activity Cost Pools, Activity Rates, and Product Costs using Activity-Based Costing Caldwell Home Appliances Inc. is estimating the activity cost associated with producing ovens and refrigerators. The...

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