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) $288,000 Production scheduling (400 batches) 60,000 Production engineering (60 change orders) 180,000 Supervision (2,000 direct labor hours) 56,000 Machine maintenance (12,000 machine hours) 168,000 Total activity costs $752,000 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 Production scheduling cost $ Production engineering cost $ Supervision cost Machine operating cost $ b. Calculate the cost of Job 845 using ABC to assign the overhead costs. Job 845 Direct materials cost Direct labor cost Manufacturing overhead costs: b. Calculate the cost of Job 845 using ABC to assign the overhead costs. Job 845 Direct materials cost Direct labor cost Manufacturing overhead costs: Setup costs Production scheduling Production engineering Supervision Machine operations Total cost 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. 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 Direct labor cost Manufacturing overhead cost: Total cost 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 $484,000 Finishing Department manufacturing overhead $260,000 Machine hours used Milling Department 10.000 hours 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. $484,000 $260,000 Milling Department manufacturing overhead Finishing Department manufacturing overhead Machine hours used Milling Department Finishing Department Labor hours used Milling Department Finishing Department 10,000 hours 2,000 hours 1,000 hours 1,000 hours Round rates to two decimal places, if needed. per Milling Dept. machine hour 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 Direct labor cost Manufacturing overhead costs: Milling Department Finishing Department Total cost
