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1-What is broad averaging and what consequences can it have on costs?
1-What is broad averaging and what consequences can it have on costs?
2-Please determine the activity-cost-driver rate for packaging costs from the information given.
Buttercream
Projected sales in units 500,000
PER UNIT data:
Selling price $0.80
Direct materials $0.20
Direct labor $0.04
Hours per 1,000-unit batch:
Direct labor hours 2
Oven hours 1
Packaging hours 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead Costs Activity levels
Direct Labor 2,400 hours
Oven $220,000 1,500 hours
Packaging $170,000 850 hours
Total Costs $390,000
