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:
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If Gregory Enterprises uses a simple cost system based on direct labor hours, then what amount of indirect costs will be allocated to the Mossman job?
Answer: -
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What is the activity rate for machine maintenance costs?
Answer: -
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If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job?
Answer: -
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When selling prices are based on costs assigned using the single cost driver, direct labor hours, then would the Mossman job be overbilled or underbilled
Answer: -
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What are the benefits of ABC
Answer: -
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