Question

Bluefield has decided to use an ABC costing system and has identified the following detailed information about its cost pools and cost drivers: Activity cost pools Materials handling $56,000 Machine maintenance $17,640 Cost drivers Number of material moves 500 Number of machine hours 42,000 Required: 1. Calculate Bluefield’s activity rate for each cost pool. 2. Determine the amount of overhead assigned to Bluefield’s products if each has the following activity demands: Product A Product B Number of material moves 290 210 Number of machine hours 17,200 24,800

• 1
• Required 2

Calculate Bluefield’s activity rate for each cost pool. (Round your final answer for per material moves to nearest dollar amount and per machine hour to 4 decimal places.)

	Activity Rate Materials Handling per Material Move Machine Maintenance per Machine Hour

Determine the amount of overhead assigned to Bluefield’s products if each has the following activity demands: (Round intermediate calculations to 4 decimal places and your final answers to 2 decimal places.)

	Product A	Product B
Number of material moves	290	210
Number of machine hours	17,200	24,800

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	Total Overhead Assigned Product A Product B

  

3.

Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:

Activity Cost Pools	Total Cost of Pool		Cost Driver	Estimated Cost Driver
Machining	$	195,920	Number of machine hours		63,200
Designing costs		50,400	Number of design hours		6,000
Setup costs		69,776	Number of batches		490

Required:

1. Compute the activity rate for each activity.

2. Classify each activity as facility, product, batch, or unit level.

• d 1
• Required 2

Compute the activity rate for each activity. (Round your answers to 2 decimal places.)

	Activity Activity Rate Machining per Machine Hour Design Costs per Design Hour Setup per Batch

Classify each activity as facility, product, batch, or unit level.

	Machining Design Setup

Answer 1

Bluefield
Activity cost pool	Cost	Cost drivers	Cost drivers units	Activity rate for each cost pool
Material handling	56000	Number of material moves	500	112	per Material Move
Machine Maintenance	17640	Number of machine hours	42000	0.42	per Machine Hour
	73640
Cost drivers	Product A	Product A	Activity rate for each cost pool	Overhead cost A	Overhead cost B
Number of material moves	290	210	112	32480	23520
Number of machine hours	17200	24800	0.42	7224	10416
				39704	33936
Gable Company
Activity Cost Pools	Total Cost of Pool	Cost Driver	Estimated Cost Driver	Activity rate for each activity
Machining	1,95,920	Number of machine hours	63,200	3.1	per Machine Hour
Designing costs	50,400	Number of design hours	6,000	8.4	per Design Hour
Setup costs	69,776	Number of batches	490	142.4	per Batch
Classify each activity as facility, product, batch, or unit level.
Machining	unit level
Design	product level
Setup	batch level

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