help! Accounting QUestion! One Detailed involved accounting question!!!! Big Points and …


Question Description:

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Adirondack Corporation is estimating activity costs associated with producing wireless mice and tethered mice. The indirect labor can be traced to three separate activity pools. The budgeted activity cost and activity base information, along with the estimated activity-base information, is provided below. ACTIVITY COST ACTIVITY BASE Purchasing $370,000 number of purchase orders Materials handling 500,000 number of moves Production 1,500,000 machine hours TOTAL $2,370,000 Number Of Purchase Orders Number Of Moves Machine Hours Number Of Units Wireless mice 4,000 1400 2000 2000 Tethered mice 4,000 800 8000 4000 TOTAL 8000 2200 10000 6000 Determine the Activity rate for each activity cost pool, & complete the following chart to determine the total indirect labor allocated to each UNIT under the ABC model. WIRELESS MICE TETHERED MICE ACTIVITY ACTIVITY BASE USAGE x ACTIVITY RATE = ACTIVITY COST / ACTIVITY BASE USAGE x ACTIVITY RATE = ACTIVITY COST I f traditional costing had been used and number of units were the allocation base, what would the single allocation rate be? Given your answer which method would you suggest to management, ABC or a single allocation rate? Please explain your decision.

Answer

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