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Week4assignment-4_Acme Manufacturing_ABC Costing




Question;Acme Manufacturing Company of Portland, Oregon has a Research & Development department that currently provides services to in-house manufacturing departments. Other manufacuturers have expressed interested in using Acme's R&D department for special projects. Management has decided to conduct an activity-based costing system in order to determine charges for both outside and in-house users of the department's services. R&D activities fall into four pools with the following annual costs:Market Analysis 10,50,000Product Design 23,50,000Product Development 36,00,000Prototype Testing 14,00,000Activity analysis determines that the appropriate cost drivers and their usage for the four activities are:ActivitiesCost DriversTotal Estimated DriversMarket AnalysisHours of analysis1500 hoursProduct DesignNumber of designs2500 designsProduct DevelopmentNumber of products90 productsPrototype TestingNumber of tests500 testsa) Compute the activity-based overhead rate for each pool. Use appropriate excel formulas to show your workMarket AnalysisProduct DesignProduct DevelopmentPrototype Testingb) How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours ofmarket analysis time, was provided 280 designs relating to 10 products and requested 92 engineering tests?Show your work.Market AnalysisProduct DesignProduct DevelopmentPrototype TestingTotalc) How much cost would serve as the basis for for pricing an R&D bid with an outside company on a contract thatwould consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests?Show your work.Market AnalysisProduct DesignProduct DevelopmentPrototype TestingTotald) What is the benefit to Acme Manufacturing of applying activity-based costing to its R&D activity for bothin-house and outside charging purposes?


Paper#38294 | Written in 18-Jul-2015

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