Question

Cardiff and Delp is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period.
  

	Activities		Costs
Design department
Client consultation	1,700	contact hours	$	170,000
Drawings	2,600	design hours		140,400
Modeling	47,000	square feet		37,600
Project management department
Supervision	1,200	days	$	228,000
Billings	5	jobs		8,200
Collections	5	jobs		4,900

Required:
1. & 2. Using ABC, compute the firm's activity overhead rates. Form activity cost pools where appropriate. Assign costs to a 8,800-square-foot job that requires 490 contact hours, 356 design hours, and 210 days to complete. (Round activity rate answers to 2 decimal places.)

Answer 1

we will first find activity overhead rates

= Total cost/activity

Design department Activity overhead rate Client consultation 1,700 contact hours $ 170,000 $100 per contact hour[$170,000/1700] Drawings 2,600 design hours 140,400 $54 per design hour[$140,400/2,600] Modeling 47,000 square feet 37,600 $0.8 per square feet[$37,600/47,000] Project management department Supervision 1,200 days $ 228,000 $190 per day[$228,000/1200] Billings 5 jobs 8,200 $1,640 per job [$8200/5] Collections 5 jobs 4,900 $980 per job[$4,900/5]

Now we will allocate costs

Design department

Activity overhead rate Activity Cost allocated $100 per contact hour[$170,000/1700] 490 $49,000[$100*490] $54 per design hour[$140,400/2,600] 356 $19,224[$54*356] $0.8 per square feet[$37,600/47,000] 8800 $7,040[8800*$0.8] $190 per day[$228,000/1200] 210 $39,900[$190*210] $1,640 per job [$8200/5] 1 $1,640 $980 per job[$4,900/5] 1 $980 Total cost allocated $117,784

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