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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 2 years ago
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