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indweek4assignment_1.xlsxSheet1
| R&D activities fall into four pools with the following annual costs: | ||||||
| Market Analysis | 1,050,000 | |||||
| Product Design | 2,350,000 | |||||
| Product Development | 3,600,000 | |||||
| Prototype Testing | 1,400,000 | |||||
| Activity analysis determines that the appropriate cost drivers and their usage for the four activities are: | ||||||
| Activities | Cost Drivers | Total Estimated Drivers | ||||
| Market Analysis | Hours of analysis | 1500 hours | ||||
| Product Design | Number of designs | 2500 designs | ||||
| Product Development | Number of products | 90 products | ||||
| Prototype Testing | Number of tests | 500 tests | ||||
| a) Compute the activity-based overhead rate for each pool. Use appropriate excel formulas to show your work | ||||||
| Market Analysis | ||||||
| Product Design | ||||||
| Product Development | ||||||
| Prototype Testing | ||||||
| b) How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of | ||||||
| market analysis time, was provided 280 designs relating to 10 products and requested 92 engineering tests? | ||||||
| Show your work. | ||||||
| Market Analysis | ||||||
| Product Design | ||||||
| Product Development | ||||||
| Prototype Testing | ||||||
| Total | ||||||
| c) How much cost would serve as the basis for for pricing an R&D bid with an outside company on a contract that | ||||||
| would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests? | ||||||
| Show your work. | ||||||
| Market Analysis | ||||||
| Product Design | ||||||
| Product Development | ||||||
| Prototype Testing | ||||||
| Total | ||||||
| d) What is the benefit to Acme Manufacturing of applying activity-based costing to its R&D activity for both | ||||||
| in-house and outside charging purposes? |
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.
