Alexander Custom Furniture has five indirect-cost pools (purchasing, material handling, machine maintenance, product inspection and packaging). The company is in the process of bidding on two jobs:

1)Job 0802: an order of 15 intricate personalised furniture.

2)Job 2408: an order of 6 standard personalised furniture.

The controller wants you to compare overhead allocated under the simple job-costing system and newly designed activity-based job-costing system. Total budgeted costs in each indirect-cost pool and the budgeted quantity of activity driver are as follows:

Budgeted Overhead

ActivityDriver

Budgeted Quantity of Activity Driver

Purchasing

$70,000

Purchase orders processed

4,000

Material handling

$87,500

Material moves

10,000

Machine maintenance

$237,300

Machine-hours

21,000

Product inspection

$18,900

Inspections

3,780

Packaging

$39,900

Units produced

7,980

$453,600

Information related to Job 0802 and Job 2408 follows. Job 0802 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved and inspected relative to Job 2408.

Job 0802

Job 2408

Number of purchase orders

25

8

Number of material moves

10

4

Machine-hours

40

60

Number of inspections

9

3

Units produced

15

6

REQUIRED:

A)Determine the overhead rate and thetotal amount of overhead costs allocated to Job 0802 under a simple costing system, where overhead is allocated based on machine-hours.(4 marks)

B)Determine the overhead rate and thetotal amount of overhead costs allocated to Job 2408 under an activity-based costing system using the appropriate activity drivers.(11 marks)