Tara is thinking of implementing an ABC Method using the following Cost Pools and Cost Drivers:
Cost Pools Amount Cost Drivers Amount
Machine SetUp $ # setups
Quality Inspect $ # inspect
Purchase Orders $ # of PO
Machine Costs $ # hours
Product A had the following data:
# of machine setups
# inspections
Purchase Orders
Machine Hours
Product B had the following data:
# of Machine Setups
# Inspections
# Purchase Orders
# Machine Hours
b What would be the amount of Manufacturing Overhead charged to Product A and Product B if Tara implements Activity Based Costing ABC
c How much would Product A be Over or undercharged for Manufacturing Overhead if Tara implements the ABC method instead of using the Plantwide Rate?
d How much would Product B be under or overcharged for Manufacturing Overhead if Tara implements the ABC method instead of using a plantwide rate?
