Craftmore Machining produces machine tools for the construction industry. The following details about overhead cost were take from it's company records Production Activity Indirect Labor Indirect Materials Other Overhead Grinding $320,000 Polishing $135,000 Product modification 600,000 Providing power $255,000 System calibration 500,000 Additional information on the drivers for its production activities follows Grinding 13,000 machine hours Polishing 13,000 machine hours Product modification 1,500 engineering hours providing power 17,000 direct labor hours System calibration 400 batches 1) classify each activity as unit level, batch level, product level or facility level 2) compute the activity overhead rates using ABC. Form cost pools as appropriate 3) determine overhead cost to assign to the following jobs using ABC Job 3175 Job 4286 Number of units 200 units 2,500 units Machine Hours 550mh 5,500 mh Engineering hours 26 eng hours 32 eng hours Batches 30 batches 90 batches Direct labor hours 500 DLH 4,375 DLH 4) What is the overhead cost per unit for Job 3175? What is the overhead cost per unit Job 4286? 5) If the company used a plantwide overhead rate based in direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? 6) Compare the overhead cost per unit computer in requirements 4 and for each job. Which method more accurately assigns overhead costs?

[Type text] [Type text] [Type text] BUS4061 - Applying Activity-Based Costing Template Used for Unit 4 Applying Activity-Based Costing Assignment Problem 17-2A 1. Grinding..................................................................................... Polishing.................................................................................... Product modification................................................................. Providing power........................................................................ System calibration..................................................................... 2. Grinding & Polishing Product modification Providing power System calibration 3. Job 3175 Job 4286 Grinding & polishing Product modification Providing power System calibration Total cost of job 4. Job 3175 Job 4286 Total overhead cost of job Number of units in job Average overhead cost per unit 5. Plant-wide rate: Grinding..................................................................................... Polishing.................................................................................... Product modification................................................................. [Type text] [Type text] 1 [Type text] [Type text] [Type text] [Type text] Providing power........................................................................ System calibration..................................................................... Total............................................................................................ Direct labor hours................................................................... Per DLH...................................................................................... Job 3175 Job 4286 Job 3175 Job 4286 Overhead 6. Average overhead cost Using ABC Using plant-wide rate [Type text] [Type text] 2 [Type text]