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4. Wall, Inc., has identified the following overhead costs and cost drivers: Activity Estimated Cost Cost Driver Setups $10,000 500 Number of setups Ordering $16,000
4. Wall, Inc., has identified the following overhead costs and cost drivers: Activity Estimated Cost Cost Driver Setups $10,000 500 Number of setups Ordering $16,000 Number of orders 4,000 Maintenance $40,000 Number of machine hours 8,000 Power $25,000 Number of kilowatt hours 50,000 The following are two of the jobs completed during the year: Job 25 Direct materials Direct labor Units completed Number of direct labor hours Number of setups Number of orders Number of machine hours Number of kilowatt hours 100 The company's normal activity is 4,000 direct labor hours. a. If Wall uses direct labor hours to allocate overhead costs, what is the total cost for Job 25? b. If Wall uses machine hours to allocate overhead costs, what is the total cost of Job 25? (Do not round your final answer.) c. If Wall uses ABC drivers to allocate overhead costs, what is the total cost for Job 25 using the provided tables? $5,000 $1,400 300 100 Job 18 60 $3,000 $2,400 150 70 28580 148 82 12 45 Activity Cost Pool Activity Cost Pool Setup Ordering Maintenance Power Total Total Cost Assigned $10,000 $16,000 $40,000 $25,000 $91,000 Activity Rate Total Expected Activity 500 setups 4,000 orders 8,000 machine hours 50,000 kilowatt hours X X X Activity Rate Allocated Costs Job 25 Expected Activity Job 25 Setup Ordering Maintenance Power X Total indirect overhead Units produced Indirect overhead per unit Job 25 $5,000.00 Direct materials Direct labor $1,400.00 Indirect costs Total cost d. Compare the results for letters (b) and (c). If Wall uses machine hours to allocate overhead costs, is Job 25 overcosted or undercosted? Explain. e. Compare the answers for letters (a), (b), and (c). Comment on the implications for decision making from the resulting cost of Job 25 in those answers
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