Question
Andersen Grocery is trying to calculate costs in several departments. They have the following cost data available: Produce Frozen Deli Total # of Items Sold
Andersen Grocery is trying to calculate costs in several departments. They have the following cost data available:
| Produce | Frozen | Deli | Total |
# of Items Sold | 25,000 | 225,000 | 62,500 | 312,500 |
# of Purchase Orders | 300 | 700 | 600 | 1,600 |
# of Deliveries | 250 | 1,500 | 750 | 2,500 |
Hours of Shelf Time | 1,000 | 5,000 | 4,000 | 10,000 |
Currently overhead costs are allocated based on the number of items sold (one cost pool). Overhead costs are as follows:
Ordering Costs: $50,000
Delivery Costs $200,000
Shelf Stocking Costs $150,000
Total Budgeted Overhead Costs $400,000
Required
- Allocate the total overhead among the three departments using one pool using number of items sold.
- Allocate the overhead between the three departments using ABC costing as follows:
- Allocate ordering costs based on the number of purchase orders
- Allocate delivery costs based on the number of deliveries
- Allocate shelf stocking costs based on the number of hours of shelf stocking
Overhead Rate One Pool (# of items sold) |
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Overhead Rate Ordering Costs |
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Overhead Rate Delivery Costs |
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Overhead Rate Shelf Stocking Costs |
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Allocation of Overhead
| Produce | Frozen | Deli | Total |
Allocation of Overhead One Pool |
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Allocation of Ordering Costs |
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Allocation of Delivery Costs |
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Allocation of shelf Stocking Costs |
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Total Overhead Costs |
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