ACC 310 Week 3 DQ 2 Activity Based Costing

From Chapter 9 complete Questions 9-19 and 9-21. Remember to complete all parts of the problems and report the results of your analysis. Do not forget to show the necessary steps and explain how your attained that outcome. Respond to at least two of your classmates’ postings.

Question 9-19

“Activity-based costing is Question 9-1 just another inventory valuation method. It isn’t relevant for making operating decisions “Do you agree with this statement? Explain.

Question 9-21

a.)    Compute the profit for each product using plantwide allocation.

b.)     Maria, the manager of Department T, was convinced that tennis rackets were really more profitable than baseball bats. She asked her colleague in accounting to break down the overhead cost for the two departments. She discovered that had department rates been used. Department B would have had a rate of 150 percent of direct labor cost and Department T would have had a rate of 300 percent of direct labor cost. Recompute the profits for each product using each department’s allocation rate (based on direct labor cost).

c.)    Why are the results different in requirements (c) and (b)?