Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A firm has three categories of budgeted overhead costs. Supervisor Salaries: $ 7 5 0 , 0 0 0 Equipment Lease: $ 1 9 0

A firm has three categories of budgeted overhead costs.
Supervisor Salaries: $750,000
Equipment Lease: $190,000
Maintenance: $75,000
After an activity-based costing study, the firm develops the following percentage table.
Activity Cost Pool Pre-processing Processing Other
Supervisor Salaries 25%25%50%
Equipment Lease 25%75%0%
Maintenance 40%30%30%
The firm uses machine hours (12,500 budgeted hours) as the activity driver for the Pre-processing activity.
The firm uses direct labor hours (10,000 budgeted hours) as the cost driver for the Processing activity.
If one of the firm's many jobs consumes $5,250 in direct costs, 17 machine hours and 82 direct labor hours, how much total cost is allocated to this job?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Answer To allocate the total cost to the job we need to calculate the costs for each activity based on the given percentages and then multiply those costs by the actual activity driver usage for the job 1 Preprocessing Activity Cost Supervisor Salaries 750000 25 187500 Total Preprocessing Cost 187500 2 Processing Activity Cost Supervisor Salaries 750000 25 187500 Maintenance 75000 40 30000 Total Processing Cost 187500 30000 217500 3 Other Activity Cost Since the Other activity doesnt have any budgeted costs we dont need to calculate anything for it Now lets calculate the cost ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Decision Making and Performance Management

Authors: Ray Proctor

4th edition

273764489, 978-0273764489

More Books

Students also viewed these Accounting questions

Question

Define Decision making

Answered: 1 week ago

Question

What are the major social responsibilities of business managers ?

Answered: 1 week ago

Question

What are the skills of management ?

Answered: 1 week ago