Question

Jones Company produces and sells cookies. The company manufactures two different types of cookies; Chocolate Chip and Double Chocolate. The company produced 10,000 Chocolate Chip and 12,000 Double Chocolate cookies for the period. The following information is available for their company for this same period based on this level of production:

			Volume of Activity
Activity	Allocation Base	Overhead Costs	Chocolate Chip	Double Chocolate
Machine setup	Number of setup	$275,000	500	500
Production	Machine hours	$1,250,000	28,500	21,500
Assembly	Direct labor hours	$343,650	8,900	14,800

A) Calculate the overhead rate using traditional overhead allocation with direct labor hours as the allocation base. Round to the nearest cent (two decimals).

B) What is the total overhead cost for each type of cookie produced for the period – Chocolate Chip and Double Chocolate using traditional allocation method?

C) What is the total overhead cost per unit for each type of cookie using the traditional allocation method?

Jones Company produces and sells cookies. The company manufactures two different types of cookies; Chocolate Chip and Double Chocolate. The company produced 10,000 Chocolate Chip and 12,000 Double Chocolate cookies for the period. The following information is available for their company for this same period based on this level of production:

			Volume of Activity
Activity	Allocation Base	Overhead Costs	Chocolate Chip	Double Chocolate
Machine setup	Number of setup	$275,000	500	500
Production	Machine hours	$1,250,000	28,500	21,500
Assembly	Direct labor hours	$343,650	8,900	14,800

A) Calculate the overhead rate for each activity using the activity-based costing allocation method.

B) What is the total overhead cost for each type of cookie produced for the period – Chocolate Chip and Double Chocolate using the activity-based costing allocation method?

C) What is the total overhead cost per unit for each type of cookie using the activity-based costing allocation method?

Answer 1