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Sagot :
a) The computation of the quality-control overhead cost to be assigned by Trendy Toys to the toddler toy line for August:
1) Using the traditional product costing system is $76,130 ($331,000 x 23%).
2) Using the activity-based costing system is $61,280 (42,000 x $0.80 + 163,000 x $0.16 + 800 x $2.00).
= ($33,600 + $26,080 + $1,600)
b) The traditional product costing system overcasts the overhead by $14,850 ($76,130 - $61,280) when compared with the activity-based system.
c) The classification of the activities as value-added or non-value-added is as follows:
Materials Inspection Non-value added
Assembly Line Inspection Non-value added
National Toy Association Non-value added
What is a non-value-added activity?
A non-value-added activity is a production activity that does not increase the value of the product or service delivered to the customer.
Examples of non-value-added production activities undertaken by Trendy Toys are materials inspection, assembly-line inspection, and payment for the National Toy Association Certification.
d) Under the new proposal, the overhead cost assigned to the toddler toy line for August using activity-based costing is $60,450.
= $60,450 (42,000 x $0.80 + 163,000 x $0.15 + 800 x $3.00)
= $60,450 ($33,600 + $24,450 + $2,400)
e) Trendy Toys should accept the offer from National Toy Association because it reduces its overhead cost by $830 ($61,280 - $60,450).
Data and Calculations:
Quality control overhead costs rate = 23% of direct labor cost
Direct labor cost for August = $331,000
Activity Cost Pools Cost Drivers Overhead Number of Cost
Rate Drivers Used
per Activity
Materials Inspection Number of pounds $0.80 per pound 42,000pounds
Assembly Line Inspection Number $0.16 per toy 163,000 toys
of finished toys
National Toy Retail orders $2.00 per order 800 orders
Association
Certification
Thus, by accepting the National Toy Association's offer, Trendy Toys' overhead cost will be reduced by $830 under the activity-based costing system.
Learn more about the activity-based costing system at https://brainly.com/question/6654166
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