Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows: Information (on a per unit basis) related to three popular products at Njombe are as follows:
In comparing the traditional system with the activity-based costing system, which of Njombe's Models had higher unit product costs under the traditional system?
A) #19
B) #58
C) #19 and #58
D) #36 and #58

Question

Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:  Information (on a per unit basis) related to three popular products at Njombe are as follows:
 In comparing the traditional system with the activity-based costing system, which of Njombe's Models had higher unit product costs under the traditional system?
A) #19 
B) #58 
C) #19 and #58 
D) #36 and #58

Quizplus · Accepted Answer

The Answer of Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:  Information (on a per unit basis) related to three popular products at Njombe are as follows:
 In comparing the traditional system with the activity-based costing system, which of Njombe's Models had higher unit product costs under the traditional system?
A) #19 
B) #58 
C) #19 and #58 
D) #36 and #58

Njombe Corporation Manufactures a Variety of Products