Question
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs: Setup (1,000 setup hours) $164,000 Production
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs:
Setup (1,000 setup hours) | $164,000 |
Production scheduling (400 batches) | 80,000 |
Production engineering (60 change orders) | 120,000 |
Supervision (2,000 direct labor hours) | 56,000 |
Machine maintenance (12,000 machine hours) | 84,000 |
Total activity costs | $504,000 |
The following additional data were provided for Job 845
Direct materials costs | $12,000 |
Direct labor cost (5 Milling direct labor hours; | |
35 Finishing direct labor hours) | $6,000 |
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 cost | Answer
|
Production engineering cost | Answer
|
Supervision cost | Answer
|
Machine operating cost | Answer
|
b. Calculate the cost of Job 845 using ABC to assign the overhead costs.
Job 845 | ||
---|---|---|
Direct materials cost | Answer
| |
Direct labor cost | Answer
| |
Manufacturing overhead costs: | ||
Setup costs | Answer
| |
Production scheduling | Answer
| |
Production engineering | Answer
| |
Supervision | Answer
| |
Machine operations | Answer
| |
Total cost | Answer
|
c. Calculate the cost of Job 845 using a company-wide overhead rate based on machine hours.
First, compute company-wide overhead rate using machine hours (Note: Information needed for this computation can be found in the table below in part d.) Round rate to two decimal places. $Answer
per machine hour Next, use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
Job 845 | |
---|---|
Direct materials cost | Answer
|
Direct labor cost | Answer
|
Manufacturing overhead cost: | Answer
|
Total cost | Answer
|
d. Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling Department and a direct labor hour overhead rate for the Finishing Department.
Milling Department manufacturing overhead | $364,000 |
Finishing Department manufacturing overhead | $140,000 |
Machine hours used | |
Milling Department | 10,000 hours |
Finishing Department | 2,000 hours |
Labor hours used | |
Milling Department | 1,000 hours |
Finishing Department | 1,000 hours |
Round rates to two decimal places, if needed. $Answer
per Milling Dept. machine hour $Answer
per Finishing Dept. direct labor hour
Use rounded overhead rates calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
Job 845 | |
---|---|
Direct materials cost | Answer
|
Direct labor cost | Answer
|
Manufacturing overhead costs: | |
Milling Department | Answer
|
Finishing Department | Answer
|
Total cost | Answer
|
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