Maggie's Motors manufactures boat motors. Maggie is shifting from a traditional costing system to an activity-based costing system. She has started by identifying four overhead cost activities. Listed below is the table that Maggie created identifying the cost activities and the percentage of time spent on each activity by various factory employees. Orderingparts RepairingequipmentInspectingmotorsEngineeringchanges Maintenance person 0%75%0%25%Production foreman15%15%40%30%Factory superintendent10%0%50%40%Accountant50%0%0%50% Maggie also gathered the total overhead cost associated with each factory employee which is shown below:Maintenance person$ 75,000Production foreman90,000Factory superintendent105,000Accountant85,000
Question
Maggie's Motors manufactures boat motors. Maggie is shifting from a traditional costing system to an activity-based costing system. She has started by identifying four overhead cost activities. Listed below is the table that Maggie created identifying the cost activities and the percentage of time spent on each activity by various factory employees. Orderingparts RepairingequipmentInspectingmotorsEngineeringchanges Maintenance person 0%75%0%25%Production foreman15%15%40%30%Factory superintendent10%0%50%40%Accountant50%0%0%50% Maggie also gathered the total overhead cost associated with each factory employee which is shown below:Maintenance person$ 75,000Production foreman90,000Factory superintendent105,000Accountant85,000
Solution
It seems like you haven't asked a specific question. However, I can guide you on how to allocate the overhead costs based on the information provided.
Here's how you can do it:
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Determine the total overhead cost for each employee. This is already provided in the question.
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Multiply the total overhead cost for each employee by the percentage of time they spend on each activity. This will give you the cost allocated to each activity by each employee.
For example, for the maintenance person:
- Ordering parts: 0
- Repairing equipment: 56,250
- Inspecting motors: 0
- Engineering changes: 18,750
Repeat this process for each employee and each activity. Then, add up the costs allocated to each activity by all employees to get the total cost for each activity.
Remember, the goal of activity-based costing is to more accurately assign overhead costs to products or services based on the activities they require.
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The final step in the activity-based costing system is to Blank______.Multiple choice question.identify the activitiesidentify the cost driver(s)compute a cost driver rateassign the activity costs to products
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