(25 pts) 3. Herro Corporation has established the following cost pools for 2019. COST POOLS...
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(25 pts) 3. Herro Corporation has established the following cost pools for 2019. COST POOLS COMMITTED COSTS COST DRIVERS LEVEL Maintenance Materials handling Machine setup Inspection Total $ 40,000 50,000 60,000 50,000 $200,000 Machine hours Number of moves Setup hours Number of inspections 10,000 250 1,000 500 The following information pertains to two representative jobs completed during January 2019. ITEM Job A1 Job B2 Direct materials cost Direct labor cost Number of units Direct labor hours Machine hours Number of material moves Number of setup hours Number of inspections $ 20,000 $ 15,000 3,000 800 800 50 $ 15,000 $8,000 2,000 600 100 40 Required: a) Determine the unit cost of each job using machine hours to allocate all support costs. b) Determine the unit cost of each job using activity-based costing. c) Determine the selling price of each job, if the desired gross profit is 40% and the traditional costing approach was used. d) Determine the selling price of each job, if the desired gross profit is 40% and the activity based costing approach was used. e) Which of the two methods produces more accurate estimates of job costs and profits? Explain. Scanned with CamScanner
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