Question

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.
  

	Rounded Edge				Squared Edge					Total
Direct materials		$	9,500			$	21,700		$	31,200
Direct labor			6,100				12,000			18,100
Overhead (300% of direct labor cost)			18,300				36,000			54,300
Total cost		$	33,900			$	69,700		$	103,600
Quantity produced			10,300	ft.			14,100	ft.
Average cost per ft. (rounded)		$	3.29			$	4.94

  
Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,300 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

Overhead Cost Category (Activity Cost Pool)	Cost
Supervision		$	2,172
Depreciation of machinery			29,000
Assembly line preparation			23,128
Total overhead		$	54,300

  
She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)

		Usage
Overhead Cost Category (Activity Cost Pool)	Driver	Rounded Edge			Squared Edge			Total
Supervision	Direct labor cost ($)	$	6,100		$	12,000		$	18,100
Depreciation of machinery	Machine hours		400	hours		700	hours		1,100	hours
Assembly line preparation	Setups (number)		31	times		94	times		125	times

1. Assign these three overhead cost pools to each of the two products using ABC.
Activity	Overhead Cost		Activity Drivers		Activity Rate
Supervision				Direct labor cost		%
Depreciation of machinery				Machine hours
Assembly line preparation				Setups
Rounded edge	Activity rate				Activity driver incurred		Overhead assigned
Supervision		%	0
Depreciation of machinery			0
Assembly line preparation			0
Squared edge	Activity rate				Activity driver incurred		Overhead assigned
Components
Supervision		%	0
Depreciation of machinery			0
Assembly line preparation			0
2. Determine average cost per foot for each of the two products using ABC.
			Rounded edge	Squared edge

Answer 1