Farrow Corporation manufactures two products: A and B. The total indirect manufacturing overhead resource costs of $100,350 have been assigned to four activity cost pools that use the following cost drivers:
$$\begin{array} { l c c c c }
\textbf { Product } & \textbf { Number of Setups } & \textbf { Machine Runs } & \textbf { Packing Hours } & \textbf { Orders } \
\hline \text { Product A } & 20 & 35 & 1,000 & 75 \
\text { Product B }& 10 & 70 & 1,500 & 125 \
\text { Cost per Pool } & \$ 8,100 & \$ 5,100 & \$ 65,000 & \$ 22,000
\end{array}$$ Required:
a. Compute the unit activity costs for each of the cost drivers listed.
b. Assign the overhead costs to products A and B using activity-based costing.

Question

Farrow Corporation manufactures two products: A and B. The total indirect manufacturing overhead resource costs of $100,350 have been assigned to four activity cost pools that use the following cost drivers:
 $$\begin{array} { l c c c c } 
 \textbf { Product }  & \textbf { Number of Setups } & \textbf { Machine Runs } & \textbf { Packing Hours } & \textbf { Orders } \
\hline \text { Product A } & 20 & 35 & 1,000 & 75 \
\text { Product B }& 10 & 70 & 1,500 & 125 \
\text { Cost per Pool } & \$ 8,100 & \$ 5,100 & \$ 65,000 & \$ 22,000
\end{array}$$ Required:
a. Compute the unit activity costs for each of the cost drivers listed.
b. Assign the overhead costs to products A and B using activity-based costing.

Quizplus · Accepted Answer

The Answer of Farrow Corporation manufactures two products: A and B. The total indirect manufacturing overhead resource costs of $100,350 have been assigned to four activity cost pools that use the following cost drivers:
 $$\begin{array} { l c c c c } 
 \textbf { Product }  & \textbf { Number of Setups } & \textbf { Machine Runs } & \textbf { Packing Hours } & \textbf { Orders } \
\hline \text { Product A } & 20 & 35 & 1,000 & 75 \
\text { Product B }& 10 & 70 & 1,500 & 125 \
\text { Cost per Pool } & \$ 8,100 & \$ 5,100 & \$ 65,000 & \$ 22,000
\end{array}$$ Required:
a. Compute the unit activity costs for each of the cost drivers listed.
b. Assign the overhead costs to products A and B using activity-based costing.

Farrow Corporation Manufactures Two Products: a and B Required: A

Farrow Corporation Manufactures Two Products: a and B Required:
A