Accounting unit 4

Use the Comparing Costs Using ABC Template linked in the resources to complete the following in your Financial and Managerial Accounting textbook:

· Problem 17-3B, page 800.

Review the Comparing Costs Using Activity-Based Costing Scoring Guide to ensure you have met the criteria for this assignment prior to submission. Submit your completed problem in the assignment

Problem 17-3B Applying activity-based costing P1 P3 A1 A2 C3

Ryan Foods produces gourmet gift baskets that it distributes online as well as from its small retail store. The following details about overhead costs are taken from its records.

Additional information on the drivers for its production activities follows.

Required

1. Classify each activity as unit level, batch level, product level, or facility level.

2. Compute the activity overhead rates using ABC. Combine the assembling and quality inspection activities into a single cost pool.

3. Determine the overhead costs to assign to the following jobs using ABC.

1. What is the overhead cost per unit for the Holiday Basket? What is the overhead cost per unit for the Executive Basket? Check  (4) Holiday Basket, $14.25 per unit

2. If the company used a plantwide overhead rate based on direct labor hours, what is the overhead cost for each Holiday Basket unit? What would be the overhead cost for each Executive Basket unit if a single plantwide overhead rate were used? (5) Holiday Basket, $18.13 per unit

3. Compare the costs per unit computed in requirements 4 and 5 for each job. Which cost assignment method provides the most accurate cost? Explain.