Question
In: Accounting
Calculating Activity-Based Costing Overhead Rates 1. Calculate the cost per unit of activity driver for each...
Calculating Activity-Based Costing Overhead Rates
1. Calculate the cost per unit of activity driver for
each activity cost category.
Setup $_____
Production scheduling $______
Production engineering $______
Supervision $_______
Machine maintenance $______
2. Calculate the cost of Job 845 using ABC to assign the overhead costs.
$______
3. Calculate the cost of Job 845 using the plantwide
overhead rate based on machine hours. (Round your answer to the
nearest dollar.)
$_____
A food company had 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 |
Solutions
Expert Solution
1. Calculate the cost per unit of activity driver for each activity cost category.
| Setup (118000/1000) | 118 per setup |
| Production scheduling (60000/400) | 150 per batch |
| Production engineering (150000/60) | 2500 per change order |
| Supervision (46000/2000) | 23 per direct labour hour |
| Machine maintenance (60000/12000) | 5 per machine hour |
2. Calculate the cost of Job 845 using ABC to assign the overhead costs.
| Direct material cost | 7000 |
| Direct labour cost | 1000 |
| Setup cost (118*5) | 590 |
| Production scheduling (150*1) | 150 |
| Production scheduling (2500*3) | 7500 |
| Supervision (23*40) | 920 |
| Machine maintenance (5*30) | 150 |
| Total job cost | 17310 |
3. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)
Overhead rate = 434000/12000 = 36.167 per machine hour
| Direct material | 7000 |
| Direct labour | 1000 |
| Overhead cost | 1085 |
| Total job cost | 9085 |
ekkarill92 answered 3 years agoRelated Solutions
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The company expects to produce and sell 3,300 units of Product F
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uses activity-based costing to compute unit product costs for
external reports. Data relating to the company's three activity
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PoolOverhead CostProduct FProduct GTotalMachine setups$20,400144setups96setups240setupsPurchase orders$129,320854orders1,586orders2,440ordersOrder size$75,6001,310hours1,210hours2,520hoursRequired:Using the activity-based costing approach, determine the
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Calculating Activity-Based Costing Overhead Rates 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) 30,000
Production engineering (60 change orders) 90,000
Supervision (2,000 direct labor hours)
64,000 Machine maintenance (12,000 machine hours)
84,000 Total activity costs $386,000
The following additional data were provided for Job 845: Direct
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Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...
Calculating Activity-Based Costing Overhead Rates
Assume that manufacturing overhead for Goldratt Company consisted
of the following activities and costs:
Setup (1,000 setup hours)
$150,000
Production scheduling (400 batches)
80,000
Production engineering (60 change orders)
60,000
Supervision (2,000 direct labor hours)
66,000
Machine maintenance (12,000 machine hours)
48,000
Total activity costs
$404,000
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...
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...
Calculating Activity-Based Costing Overhead Rates
Assume that manufacturing overhead for Goldratt Company consisted
of the following activities and costs:
Setup (1,000 setup hours)
$150,000
Production scheduling (400 batches)
80,000
Production engineering (60 change orders)
60,000
Supervision (2,000 direct labor hours)
66,000
Machine maintenance (12,000 machine hours)
48,000
Total activity costs
$404,000
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...
Selecting the appropriate cost driver is the key to effective activity based costing. Identify three overhead...
Selecting the appropriate cost driver is the key to effective
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what you think the best cost driver would be for each element. 100
words or more.
NB/ My place of work is a food processing company
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Mastery Problem: Activity-Based Costing
(Advanced)
Activity-Based Costing
Traditionally, Overhead cost: Sometimes
referred to as "factory overhead," this is an indirect cost that is
not directly tied to the production of units, yet nonetheless must
be built into product cost in order to appropriately price it.
Examples are managerial salaries, rent expense, setup costs, and
property taxes.overhead costs are assigned based arbitrarily on the
rate of either Direct labor: This is a labor cost
directly associated with the production of goods...
In activity-based costing, each major activity has its own overhead cost pool, its own activity measure,...
In activity-based costing, each major activity has its own
overhead cost pool, its own activity measure, and its own overhead
rate.
True or False
TrueFalse
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Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:Information is given as Activity Cost Pool; Amount; Activity RateSetting up batches; $59.06; per batchProcessing customer orders; $72.66; per customer orderAssembling products; $3.75; per assembly hourData concerning the two products is below:Product K91B:Number of batches = 84; number of customer orders = 32; number of assembly hours = 483Product F650:Number of batches = 50; number of customer orders = 43; number of assembly hours...
Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:
Activity Cost Pools Activity Rate Assembling products $8.90 per assembly hour
Processing customer orders $31.23 per customer order
Setting up batches $43.72 per batch
Data for one of the company's products follow:
Product U94W
Number of assembly hours 389
Number of customer orders 53
Number of batches 61
How much overhead cost would be assigned to Product U94W using the activity-based costing system?
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Gould Corporation uses the following activity rates from its
activity-based costing to assign overhead costs to products:
Activity Cost Pool
Activity Rate
Setting up batches
$
59.31
per batch
Processing customer orders
$
72.81
per customer order
Assembling products
$
4.00
per assembly hour
Data concerning two products appear below:
Product K91B
Product F65O
Number of batches
84
55
Number of customer orders
34
48
Number of assembly hours
488
895
How much overhead cost would be assigned to Product...
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