After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Budgeted Cost Budgeted Activity Usage Set up $ 20,000 25 setups Inspection 7,500 5,000 parts inspected Utilities 10,000 5,000 machine hours (MH) Total $ 37,500 The following data pertain to Job 615. $ 2,500 $ 3,500 Direct materials Direct labor Overhead Setups Parts inspected Machine hours 2 setups 400 parts inspected 600 machine hours Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. ( Compute total product cost of Job 615, Required 1 Required 2 Required 3 Classify each of the three overhead activities as unit level, batch level, product level, or facility level. Setup Batch level Inspection Unit level Utilities Facility level Required Required 2 > After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total Budgeted Cost $ 20,000 7,500 10,000 $ 37,500 Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) The following data pertain to Job 615. $ 2,500 $ 3,500 Direct materials Direct labor Overhead Setups Parts inspected Machine hours 2 setups 400 parts inspected 600 machine hours Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (Compute total product cost of Job 615. Required 1 Required 2 Required 3 Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. (Round "Overhead rate" to 2 decimal places.) Allocate overhead to Job 615 using plantwide rate Department Plantwide Machine Overhead Rate Hours Used Overhead Allocated Job 615 Total product cost of Job 615 Direct Materials Direct Labor Overhead Product Cost Job 615 After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Budgeted Cost Budgeted Activity Usage Set up $ 20,000 25 setups Inspection 7,500 5,800 parts inspected Utilities 10,000 5,880 machine hours (MH) Total $ 37,500 The following data pertain to Job 615. Direct materials $ 2,500 Direct labor $ 3,500 Overhead $ Setups 2 setups Parts inspected 400 parts inspected Machine hours 600 machine hours Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (a Compute total product cost of Job 615. Required 1 Required 2 Required 3 Assume Business Solutions uses activity-based costing, () Compute overhead activity rates. (b) Allocate overhead cost to 615. (c) Compute total product cost of Job 615. (Round "Activity Rate" to 2 decimal places.) per MH a. Compute overhead activity rates Activity Activity Rate Setup per setup Inspection per part Utilities b. Allocate overhead to Job 615 based on actual activity usage Activity Allocated Cost Setup Inspection Utilities Total located cost $ Total product cost of Job 615 based on activity-based costing Job 615 Direct Materiais Direct Labor Overhead Product Cost
