Tesla Motors produces three models: Model S, Model 3, and Model Y. The company has...
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Accounting
Tesla Motors produces three models: Model S, Model 3, and Model Y. The company has identified four activity cost pools and their respective cost drivers as follows:
Activity Cost Pools:
Setup costs
Material handling costs
Machine maintenance costs
Quality inspection costs
Cost Drivers:
Number of setups
Number of material moves
Machine hours
Number of inspections
For the month of June, the following activity and cost data were recorded:
Total setup costs: $150,000
Total material handling costs: $100,000
Total machine maintenance costs: $120,000
Total quality inspection costs: $80,000
Additionally, the following activity data were gathered for each model:
Model S: 30 setups, 800 material moves, 1000 machine hours, 150 inspections
Model 3: 20 setups, 600 material moves, 1200 machine hours, 200 inspections
Model Y: 15 setups, 500 material moves, 800 machine hours, 100 inspections
Calculate the activity-based overhead rates for each cost pool and allocate the overhead costs to each model using the ABC method.
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