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Assignment help 5831

Help Please I don’t know how to solve this problem !! 

This question is about Activity Based Costing. 

The Peggy Playground produces children’s swing-sets. 

  • 4,500 swing-sets were produced in a recent production run. 
  • run required 1,500 machine hours, and also required four “set-ups” of equipment.  
  • Final inspection required 75 hours of inspection activity.  
  • Estimated overhead $25 per machine hr, and $3,500 per “set-up” 
  • $20 per inspection hour. 
  • Direct materials and direct labor total $500 per swing-set. 

a)    How do I Apply activity-bases costing and determine the amount assigned to a swing-set? 

b)   and For GAAP purposes, Peggy Playground applies traditional costing methods, and allocates overhead at $40 per machine hour. How much cost would be assigned to the 4,500 swing-sets? What is the per unit cost of a swing-set under the traditional approach? What might explain the higher cost assignment, and how could this influence business decision making?


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