Exercise 17-14 Activity-based costing and overhead cost allocation LO P3 The following is taken from Ronda Co.'s internal records of its factory with two production departments. The cost driver for indirect labor and supplies is direct labor costs, and the cost driver for the remaining overhead items is number of hours of machine use. Direct Labor $15,600 16,400 $32,000 Machine Use Hours 1,680 1,520 3.280 $ Department 1 Department 2 Totals Factory overhead costs Rent and utilities Indirect labor General office expense Depreciation Equipment Supplies Total factory overhead 9,000 4,600 5.600 4.600 $ 27,200 Compute the total amount of overhead cost allocated to Department 1 using activity based costing, (Round activity rate answers to 2 decimal places.) OH Allocated Estimated Cost driver Cost driver quantity incurred Estimated Cost Activity Rate Costs to be allocated Indirect labor and supplies Rent utilities, general office and depreciation Problem 17-3A Applying activity-based costing LO P1, P3, A1, A2, C3 (The following information applies to the questions displayed below.) Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Indirect Materials Other Overhead Indirect Labor $310,000 $195,000 Production Activity Grinding Polishing Product modification Providing power System calibration 550,000 $255,000 520,000 Additional information on the drivers for its production activities follows. Grinding Polishing Product modification Providing power System calibration 17,000 machine hours 17,000 machine hours 1,700 engineering hours 19,000 direct labor hours 1,000 batches Job 3175 130 units 300 MH Job 4286 1,625 units 3,000 MH Number of units Machine hours Engineering hours Batches Direct labor hours 28 eng. 31 eng. hours 30 batches 480 DLH hours 90 batches 4,320 DLH Problem 17-3A Part 1 Required: 1. Classify each activity as unit level, batch level, product level, or facility level. 1 Grinding Polishing Product modification Providing power System calibration TI Problem 17-3A Part 5 Required: 5. If the company uses a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? (Do not round intermediate calculations. Round "OH Cost per unit" answers to 2 decimal places.) Product DL hours Plantwide OH an rate Total Overhead Cost Units Produced OH Cost per unit Job 3175 Job 4286 Exercise 17-16 Using ABC in a service company LO P3 Cardiff and Delp is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period. Costs Design department Client consultation Drawings Modeling Project management department Supervision Billings Collections Activities 1,300 contact hours 2,200 design hours 42,000 square feet $200,000 132,000 27,300 BN days 8 Jobs 8 Jobs $176,000 3.100 15,740 Required: 1. & 2. Using ABC, compute the firm's activity overhead rates, Form activity cost pools where appropriate. Assign costs to a 9.200 square footjob that requires 540 contact hours, 348 design hours and 170 days to complete. (Round activity rate answers to 2 decimal places.) Activity Expected Costs Expected Activity Driver Activity Rate Activity Driver Incurred Overhead Assigned Client consultation Drawings Modeling Supervision Bilings Collection Total overhead cost
