Question

The controller established the following overhead cost pools and cost drivers:

Overhead Cost Pool	Budgeted Overhead	Cost Driver	Estimated Cost Driver Level
Machine setups	$207,000	# of setups	180 setups
Material handling	138,000	# of pounds	12,000
Quality control	245,000	# of inspections	1,000 inspections
Other overhead cost	220,000	# of machine hrs	20,000 machine hrs

An order of steel tubing used the following amounts of the cost drivers:

# of setups                               12

# of pounds                            700

# of inspections                       20

# of machine hours                900

Answer and Show Work:

1. Using volume-based costing and rounding POHR computation to nearest cent, how much overhead is assigned to the order based on machine hours as a single cost driver?

Overhead assigned to the order using MH:

2. Using ABC costing, how much total overhead is assigned to the order?

Overhead assigned to the order using ABC:

Answer 1

1)	overhead assinged to the order using MH
	810,000/20,000*900
	36450	answer
2)	Activity rates
			A	B	c=a/b	D	E=c*d
			oh	level	rate	used	allocated
	machine setups		207,000	180	1150	12	13800
	material handling		138,000	12000	11.5	700	8050
	quality control		245,000	1000	245	20	4900
	other overhead cost		220,000	20,000	11	900	9900
	total		810,000				36650
	36,650	answer