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Chaney Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: (Click the icon to
Chaney Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: (Click the icon to view the activity costs and drivers.) The Job Cost Record for Job #624 revealed that direct materials requisitioned for the job totaled $1,040. The Job Cost Record also showed that direct labor for this job totaled 5 hours at a wage rate of $22 per hour. Other data collected on the resources used by Job #624 included: Click the icon to view the other data.) Read the requirements Requirement 1. Calculate the activity cost allocation rate for each of the five pools listed in the table. (Round the allocation rate to the nearest cent. Abbreviations used: DL = direct labor; MH = machine hour.) Activity cost allocation rate Data Table Data Table i Requirements Total estimated MOH Activity costs related to activity Machine setup $ 162,500 Machining $ 907,500 Polishing. $ 168,000 Quality control $ 225,000 $ 80,000 Facility-level costs $ 1,543,000 Total manufacturing overhead (MOH)... Total estimated amount of allocation base activity 2,500 setups 5,500 machine hours 14,000 polishing cloths 2,500 tests run 3 machine setups required 4 machine hours 2 polishing cloths 4 quality control tests run 1. Calculate the activity cost allocation rate for each of the five pools listed in the table. 2. Calculate the total cost of Job #624 (use an ABC costing system). 3. Why would ABC provide a more accurate allocation of manufacturing overhead (MOH) than a plantwide rate? 4. Assume that Chaney Products used a traditional costing system rather than an ABC system. Its plantwide MOH rate would have been determined using direct labor (DL) hours as the allocation base. How much cost distortion would have occurred on this job? Print Done 40,000 DL hours Print Done ? Print Done Clear All Check
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