Besthome Inc. makes custom draperies for homes and businesses. The company uses an activity-based costing system for its overhead costs.

The company has provided the following data concerning its annual overhead costs and its activity cost pools.

Overhead Costs:

Production overhead

$225,000

Office Expense

$115,000

Total

$340,000

Distribution of resource consumption:

Activity Cost Pools

Making

Job

Drapes

Support

Other

Total

Production overhead

45%

25%

30%

100%

Office expense

25%

45%

30%

100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The amount of activity for the year is as follows:

Activity Cost Pool

Annual Activity

Making Drapes

6,000

yards

Job support

120

jobs

Other

N/A

Required:

a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

Making Drapes

Job Support

Other

Total

Production overhead

Office expense

Total

b. Compute the activity rates (i.e., cost per unit of activity) for the Making Drapes and Job Support activity cost pools by filling in the table below:

Making Drapes

Job Support

Activity

Production overhead

Office Expense

Total

c. Prepare an action analysis report in good form of a job that involves making 80 yards of drapes and has direct materials and direct labor cost of $1,970. The sales revenue from this job is $3,700.

For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; production overhead as a Red cost; and office expense as a Yellow cost.

Making Drapes

Job Support

Total

Activity

Producdtion OH

Office Expense

Total