Question
After reading an article on activity-based costing in a furniture industry trade magazine, Santana Rey wondered if it was time to take a critical look
After reading an article on activity-based costing in a furniture industry trade magazine, Santana Rey wondered if it was time to take a critical look at overhead costs in Business Solutions. In a recent month, Rey discovered that installation costs, inspection costs and utility costs made up the majority of her overhead. Additional information on overhead is included below.
Activity | Cost | Conductor | ||
Machine configuration | ps | 14,200 | 20 | lots |
component inspection | ps | 4,900 | 4,900 | parts |
utility supply | ps | 9,800 | 4,900 | machine hours |
Overhead costs have been applied to production at a rate of 60% of direct labor costs. The following data belongs to Work 6.15. |
Direct materials | ps | 2,800 | |
Direct labour | ps | 4,000 | |
lots | 7 | lots | |
Number of pieces | 460 | parts | |
machine hours | 570 | machine hours | |
Required : |
1. | Classify each of your three general activities as a unit level, lot level, product level, or facility level. |
Machine configuration | |
In component inspection | |
utility supply | |
2. | What is the total cost of job 6.15 if Business Solutions applies overhead at 60% of the direct labor cost? |
3. | What is the total cost of job 6.15 if Business Solutions uses activity-based costing? |
Step by Step Solution
3.46 Rating (149 Votes )
There are 3 Steps involved in it
Step: 1
1 Classify each of your three general activities as a unit level lot level product level or facility ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started