Question
After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze
After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. |
Activity | Cost | Driver | |
Setting up machines | $ | 16,280 | 22 batches |
Inspecting components | $ | 4,400 | 4,400 parts |
Providing utilities | $ | 11,200 | 5,600 machine hours |
Overhead has been applied to output at a rate of 40% of direct labor costs. The following data pertain to Job 6.15. |
Direct materials | $ | 2,500 | Number of parts | 400 parts | |
Direct labor | $ | 3,400 | Machine hours | 560 machine hours | |
Batches | 3 batches | ||||
Required: |
1. | What is the total cost of Job 6.15 if Business Solutions applies overhead at 40% of direct labor cost? (Omit the "$" sign in your response.) |
Total cost | $ |
2. | What is the total cost of Job 6.15 if Business Solutions uses activity-based costing? (Do not round your intermediate calculations. Omit the "$" sign in your response.) |
Total cost | $ |
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