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Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs: Setup (1,000 setup hours) $118,000 Production

Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs:

Setup (1,000 setup hours) $118,000
Production scheduling (400 batches) 60,000
Production engineering (60 change orders) 150,000
Supervision (2,000 direct labor hours) 46,000
Machine maintenance (12,000 machine hours) 60,000
Total activity costs $434,000

The following additional data were provided for Job 845:

Direct materials costs $7,000
Direct labor cost (5 Milling direct labor hours; 35 Finishing direct labor hours) $1,000
Setup hours 5 hours
Production scheduling 1 batch
Machine hours used (25 Milling machine hours; 5 Finishing machine hours) 30 hours
Production engineering 3 change orders

(a) Calculate the cost per unit of activity driver for each activity cost category. Setup $Answer

Production scheduling

$

Answer

Production engineering

$

Answer

Supervision

$

Answer

Machine maintenance

$

Answer

(b) Calculate the cost of Job 845 using ABC to assign the overhead costs.

$

Answer

(c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)

$

Answer

(d) To adequately evaluate the price and profitability of Job 845, all of the following additional costs should be considered, except:

The impact of nonmanufacturing costs.Shipping and distribution costs.The cost of operating the corporate jet.Cost of providing service to the customer after the sale and delivery of the job.All of the above should be considered.

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