Hamilton Manufacturing Company Direct materials 175,000 Materials handling 35,000 Grinding 300,000 Polishing 100,000 Product Modification 500,000...

Hamilton Manufacturing Company Direct materials 175,000 Materials handling 35,000 Grinding 300,000 Polishing 100,000 Product Modification 500,000 Providing Power 225,000 System Calibration 400,000 Machine Hours 37,500 units Direct Labor Hours 15,000 Engineering hours 1,200 Batches 200 Materials handling based on direct material cost Grinding based on machine hours Polishing based on machine hours Product Modification based on engineering hours Providing Power based on direct labor hours System Calibration based on batches Job 231 Completed 1,675 units Direct Materials 18,500 Direct labor hours 350 Machine hours 755 Engineering hours 245 Batches 35 Using the ABC Method find the activity overhead rates. Once you have those activity rates find the total cost of Job 231 including materials and the cost per unit

Expert Solution

Solution:

Computation of Activity rates
Activity cost pool	Overhead costs	Activities	Activity Rate
Material Handling	$35,000	175000	20%	% of Direct material Cost
Grinding	$3,00,000	37500	$8.00	Per machine hour
Polishing	$1,00,000	37500	$2.67	Per machine hour
Product modification	$5,00,000	1200	$416.67	per engineering hour
Providing power	$2,25,000	15000	$15.00	per direct labor hour
System Calibration	$4,00,000	200	$2,000.00	per batch

Computation of Overhead assigned to Job
Activity	Activity Rate		Activities	Overhead Allocated
Material Handling	20%	% of Direct material Cost	18500	$3,700
Grinding	$8.00	Per machine hour	755	$6,040
Polishing	$2.67	Per machine hour	755	$2,013
Product modification	$416.67	per engineering hour	245	$1,02,083
Providing power	$15.00	per direct labor hour	350	$5,250
System Calibration	$2,000.00	per batch	35	$70,000

Total Cost assigned				$1,89,087

Computation of Total cost and Units Cost
Materials Cost	$18,500
Allocated cost	$1,89,087
Total Costs	$2,07,587
No. of units	1675
Cost per unit	$123.93

ekkarill92 answered 3 months ago

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