Question

Moorman Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation totals $66,000 and indirect labor totals $4,000. Data concerning the distribution of resource consumption across activity cost pools appear below:

	Processing	Setting Up	Other
Equipment depreciation	0.50	0.15	0.35
Indirect labor	0.40	0.30	0.30

Required:

Assign overhead costs to activity cost pools using activity-based costing.

Sthilaire Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.35 direct labor-hours. The direct labor rate is $7.80 per direct labor-hour. The production budget calls for producing 2,700 units in April and 2,600 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 960 hours in total each month even if there is not enough work to keep them busy.

Required:

Prepare the direct labor budget for the next two months. (Round "labor-hours per unit" & "labor cost per hour" answers to 2 decimal places.)

Answer 1