Question

Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...

Calculating Activity-Based Costing Overhead Rates

Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs:

Setup (1,000 setup hours) $118,000
Production scheduling (400 batches) 60,000
Production engineering (60 change orders) 150,000
Supervision (2,000 direct labor hours) 46,000
Machine maintenance (12,000 machine hours) 60,000
Total activity costs $434,000

The following additional data were provided for Job 845:

Direct materials costs $7,000
Direct labor cost (5 Milling direct labor hours;35 Finishing direct labor hours) $1,000
Setup hours 5 hours
Production scheduling 1 batch
Machine hours used (25 Milling machine hours;5 Finishing machine hours) 30 hours
Production engineering 3 change orders

(a) Calculate the cost per unit of activity driver for each activity cost category.
Setup
$Answer


Production scheduling
$Answer
Production engineering
$Answer
Supervision
$Answer
Machine maintenance
$Answer

(b) Calculate the cost of Job 845 using ABC to assign the overhead costs.
$Answer

(c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)
$Answer

(d) Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling Department ($32 per hour) and a direct hour overhead rate for the Finishing Department ($102 per hour). (Round your answer to the nearest dollar.)
$Answer

Homework Answers

Answer #1

A.

Setup =$118,000/1,000 =$118

Production scheduling =$60,000/400 =$150

Production engineering =$150,000/60 =$2,500

Supervision =$46,000/2,000 =$23

Machine maintenance =$60,000/12,000 =$5

B.

Cost of job 845

Direct materials $7,000
Direct labor $1,000
Overhead:
Setup ($118×5) $590
Production scheduling (1×$150) $150
Production engineering (3×$2,500) $7,500
Supervision (40×$23) $920
Machine maintenance (30×$5) $150
Total job cost $17,310

C.

Plantwide overhead rate =$434,000/12,000 =$36.16667

Cost of job 845

Direct materials $7,000
Direct labor $1,000
Overhead(30×$36.16667) $1,085
Total job cost $9,085

D.

Direct materials $7,000
Direct labor $1,000
Overhead
Milling department (25×$32) $800
Finishing department (35×$102) $3,570
Total job cost $12,370
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. A company uses activity-based costing to determine the costs of its three products: A, B,...
1. A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Cost Pool Budgeted Cost Product A Product B Product C Activity 1 $ 89,000 7,900 10,900 21,900 Activity 2 $ 64,000 8,900 16,900 9,900 Activity 3 $ 120,000 4,400 2,900 3,525 How much overhead will be assigned to Product...
Activity-Based Costing HealthTec Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the...
Activity-Based Costing HealthTec Equipment Company manufactures stationary bicycles and treadmills. The products are produced in the Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $33 per machine hour (mh) Assembly $12 per direct labor hour (dlh) Setup $50 per setup Inspecting $30 per inspection Production scheduling $14 per production order Purchasing $8 per purchase...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing...
Job Costs Using Activity-Based Costing Heitger Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Heitger identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost    Driver Amount of Driver Materials handling $ 72,000      Number of moves 3,000   Engineering 165,000      Number of change orders 10,000   Other overhead 280,000      Direct labor hours 50,000   Heitger worked on four jobs in July. Data are as follows: Job 13-43 Job 13-44...
Activity Rates and Activity-Based Product Costing Hammer Company produces a variety of electronic equipment. One of...
Activity Rates and Activity-Based Product Costing Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant: Deluxe Regular Quantity 100,000 800,000 Selling price $900 $750 Unit prime cost $529 $483 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Activity Driver Deluxe Regular Activity Cost...
Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the...
Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 6 per direct labor-hour Machine processing $ 2 per machine-hour Machine setups $ 40 per setup Production orders $ 170 per order Shipments $ 115 per shipment Product sustaining $ 900 per product Activity data have been supplied for the following two products: Total Expected Activity K425...
Activity Rates and Activity-Based Product Costing Hammer Company produces a variety of electronic equipment. One of...
Activity Rates and Activity-Based Product Costing Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant: Deluxe Regular Quantity 100,000 800,000 Selling price $900 $750 Unit prime cost $529 $483 In addition, the following information was provided so that overhead costs could be assigned to each product: Activity Name Activity Driver Deluxe Regular Activity Cost...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and...
White Company has two departments, Cutting and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each department. The Cutting Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labor-hours. At the beginning of the year, the company made the following estimates: Department Cutting Finishing Direct labor-hours 6,300 60,000 Machine-hours 61,600 3,400 Total fixed manufacturing overhead cost $ 360,000 $ 573,000 Variable manufacturing overhead per machine-hour $ 3.00...
Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has...
Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two​ departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $35 per machine​ hour, while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour. Job 542 used the following direct labor hours and machine hours in the two​ departments: Actual results Assembly Department Sanding Department Direct labor hours used 7 3 Machine hours used 10...
Hickingbottom Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system...
Hickingbottom Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department’s predetermined overhead rate is based on machine-hours and the Finishing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Forming Finishing Machine-hours 17,000 15,000 Direct labor-hours 1,000 7,000 Total fixed manufacturing overhead cost $ 96,900 $ 65,800...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT