Answer: $465,000
Explanation:
Activity-based costing (ABC) is employed to determine the total expenses associated with activities necessary for product creation. In an ABC system, each activity related to production is allocated a corresponding cost.
From the information in the question, the following deductions can be made:
Machining costs:
= 299,000/13,000 × 7,000
= 23 × 7,000
= $161,000
Machine setup costs:
= 240,000/400 × 150
= 600 × 150
= $90,000
Cost for product design:
= 80,000/2
= $40,000
Order size costs:
= 290,000/10,000 × 6,000
= 29 × 6,000
= $174,000
Total expenses = $161,000 + $90,000 + $40,000 + $174,000
= $465,000
Thus, the total overhead cost associated with Product H27T comes to $465,000.
Answer: Apportionment
Explanation: Apportionment, also referred to as analogous estimating, is utilized when projects closely align with previous ones concerning features and costs. This allows for rapid estimation regarding project duration, cost, and features with minimal effort, accuracy, and reliance on historical data. The apportionment methodology is common in fairly standard projects with limited variation or customization.
Divisions deemed the most precarious within the company will tend to receive diminished funding. In layman's terms, the weighted average represents the cost of capital, indicating the return investors expect while reflecting the average risk of the firm. Managers often adjust this return depending on the risk levels associated with potential projects. Therefore, applying an average return across all projects would result in high-risk projects lacking sufficient funding, whereas low-risk projects would attract more resources.
Answer:
$6,900
Explanation:
Using the incremental cost allocation technique, activities need to be prioritized regarding how costs will be assigned. Here, department 2 is identified as the main user, thus rental expenses should first be allocated to them at a rate of $25/hour.
Following this, department 1 uses the machine next, so 100 hours will be charged at the same rate as department 2, while an additional 200 hours will be billed at the reduced rate of $22/hour. The total rental charges for department 1 = (100 x $25) + (200 x $22) = $2,500 + $4,400 = $6,900
