The companys overhead costs which consist of equipment

Reference no: EM13583028

Pressler Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.


Equipment depreciation (total)	$	31,800
Indirect labor (total)	$	7,200

Distribution of Resources Consumption Across Activity Cost Pools
	Machining	Setting up	Other
Equipment depreciation	0.20	0.50	0.30
Indirect labor	0.30	0.30	0.40

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.

	MHs	Batches
Product S4	12,200	600
Product V6	3,800	1,800

Total	16,000	2,400

Additional data concerning the company's products appears below:

	Product S4		Product V6
Sales (total)	$	89,500	$	80,200
Direct materials (total)	$	28,400	$	22,900
Direct labor (total)	$	43,200	$	34,000

Required:
a.	Assign overhead costs to activity cost pools using activity-based costing. (Omit the "$" sign in your response.)

	Activity Cost Pools
	Machining	Setting up	Other	Total
Equipment depreciation	$ 6360	$15900	$ 9540	$ 31800
Indirect labor	2160	2160	2880	7200

Total	$ 8520	$ 18060	$ 12420	$ 39000

b.	Calculate activity rates for each activity cost pool using activity-based costing. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

	Activity Rate
Machining	$ 0.53	per MH
Setting up	$ 7.53	per batch

c.	Determine the amount of overhead cost that would be assigned to each product using activity-based costing. (Omit the "$" sign in your response.)

	Product S4	Product V6
Machining	$6466	$ 2014
Setting up	4518	13554

Total	$ 10984	$ 15568

d.	Determine the product margins for each product using activity-based costing. (Omit the "$" sign in your response.)

	Product Margin
Product S4	$
Product V6	$

Reference no: EM13583028

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