Figure 4-20 Owens Corporation produces specially machined parts.The parts are produced in batches in one continuous manufacturing process.Each part is custom produced and requires special engineering design activity (based on customer specifications).Once the design is completed, the equipment can be set up for batch production.Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed.Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting.Costs have been assigned to each activity using direct tracing and resource drivers:
Owens produces two models: Model X and Model Y.The following table shows how the two products consume activity.

-Refer to Figure 4-20.Determine the engineering costs assigned to model X using the two most expensive activities for cost pools.The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs.(Round to two decimal places.)The engineering cost assigned to model X would be

Question

Figure 4-20 Owens Corporation produces specially machined parts.The parts are produced in batches in one continuous manufacturing process.Each part is custom produced and requires special engineering design activity (based on customer specifications).Once the design is completed, the equipment can be set up for batch production.Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed.Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting.Costs have been assigned to each activity using direct tracing and resource drivers:
 Owens produces two models: Model X and Model Y.The following table shows how the two products consume activity.
 
-Refer to Figure 4-20.Determine the engineering costs assigned to model X using the two most expensive activities for cost pools.The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs.(Round to two decimal places.)The engineering cost assigned to model X would be

Quizplus · Accepted Answer

The engineering cost assigned to model X would be $313,330. This is because the two most expensive activities for cost pools are "Design Engineering" and "Testing". The cost of "Design Engineering" is $1,566,666.67 and the cost of "Testing" is $1,253,263.33. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. Therefore, the cost of "Design Engineering" that is assigned to model X is $313,330 and the cost of "Testing" that is assigned to model X is $250,652.67.

Figure 4-20 Owens Corporation Produces Specially Machined Parts