Question2.2 If Risky Ltd used activity-based costing to allocate overhead costs, total inspecting costs allocated to Job 701 would be (1 mark): Please do NOT input any commas or symbols other than the minus sign where necessary (e.g., -$1,000 should be entered as -1000). $ [input] Maximum marks: 1 Flag question undefined简答题
登录即可查看完整答案
我们收录了全球超50000道真实原题与详细解析,现在登录,立即获得答案。

Question

Question2.2 If Risky Ltd used activity-based costing to allocate overhead costs, total inspecting costs allocated to Job 701 would be (1 mark): Please do NOT input any commas or symbols other than the minus sign where necessary (e.g., -$1,000 should be entered as -1000). $ [input] Maximum marks: 1 Flag question undefined简答题

登录即可查看完整答案

我们收录了全球超50000道真实原题与详细解析,现在登录,立即获得答案。

BlackTom AI · Accepted Answer

Activity-based costing assigns overhead by tracing each cost pool to its specific activity driver. For the inspecting cost pool the allocation rate is: inspection rate = total inspecting cost ÷ total number of inspections. Allocation to a job = inspection rate × number of inspections for that job.

Given the problem data (total inspecting costs = 46,000 and total inspections = 1,840) calculate the inspection rate:
1. Inspection rate = 46,000 ÷ 1,840
2. 46,000 ÷ 1,840 = 25 (dollars per inspection)

Next, use Job 701’s inspection activity (Job 701 has 230 inspections):
3. Allocated inspecting cost to Job 701 = inspection rate × Job 701 inspections
4. Allocated cost = 25 × 230
5. 25 × 230 = 5,750

Thus the inspecting costs allocated to Job 701 under ABC = 5,750.

Why this is correct: ABC targets the specific cost driver for each pool (inspections), so using the inspections-based rate yields the correct allocation. Other allocation bases (for example a plantwide rate using machine hours or direct labour hours) would produce different amounts because they do not reflect the actual consumption of inspection activity by Job 701; those alternatives are therefore incorrect for an ABC inspection allocation.