Question
Answer the following questions using the information below: Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for
Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
Cost Pool | Overhead Costs | Cost driver | Activity level |
Supervision of direct labour | $320,000 | Direct labour hours | 800,000 |
Machine maintenance | $120,000 | Machine hours | 960,000 |
Facility rent | $200,000 | Square metres of area | 100,000 |
Total overhead costs | $640,000 |
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The accounting records show the Mossman Job consumed the following resources:
Cost driver | Actual level |
Direct labour-hours | 200 |
Machine-hours | 1,600 |
Square metres of area | 50 |
Required:
If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job?
Answer-
What is the activity rate for machine maintenance costs?
Answer-
If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job?
Answer-
When selling prices are based on costs assigned using the single cost driver, direct labour hours, then would the Mossman job be overbilled or underbilled
Answer-
What are the benefits of ABC
Answer-
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