Acc 571 Week 4 Managerial Perspective

Week 4 Assignment - Managerial PerspectivexxxxACC/561July 8, 2014xxxxx Week 4 Assignment - Managerial PerspectiveIn this paper, there will be figures of estimated overhead and estimated drivers in related to its activities. After each question, both explanation of computation and answer will be provided with an appropriate table, such as table 1, 1-1, 1-2. This paper will conclude with the last question with indicating benefit of activity-based costing to Ideal manufacturing company. Activities of Ideal manufacturing company divided into four pools, such as market analysis, product design, product development, and prototype testing. Estimated overhead for each activity is $1,050,000, $2,350,000, $3,600,000, and $1,400,000. In addition, estimated drivers for each activity are 15,000 hours, 2,500 designs, 90 products, and 500 tests.Question 1. Compute the activity-based overhead rate for each activity cost pool. Activity-based overhead rate is computed by dividing estimated overhead per activity by expected use of cost driver per activity (Kimmel, Weygandt, & Kieso, 2011). Hence, market analysis of the activity-based overhead is computed as $70, product design for $940, product development for $40,000, and prototype testing for $2,800 (see Table 1).