Using abc as the benchmark calculate the percentage error

Reference no: EM13597057

Glock company has identified hte following overhead activities, costs, and activity drivers for the coming year:

Activity Expected cost Activity driver Activity capacity
Setting up equipment 252000 number of setups 300
ordering materials 36000 number of orders 1800
Machining 252000 machine hours 21000
Receiving 60000 receiving hours 2500

Glock produces two models of cell phones with the following expected activity demand:

Model A Model B
Units completed 10000 20000
Number of setups 200 100
number of orders 600 1200
Machine hours 12000 9000
Receiving hours 750 1750

Required:
1) Determine the total overhead assigned to each product using the four activity drivers.
2) Determine the total overhead assigned to each model using the two most expensive activities.
3) Using ABC as the benchmark, calculate the percentage error and comment on the accuracy of the reduced system. Explain why this approach may be desirable.

Reference no: EM13597057

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