Question

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

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

Production scheduling
Production engineering
Supervision
Machine maintenance

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

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

(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.)

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.

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