Exercise 17-14 Activity-based costing LO P3 A2

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.

	Rounded Edge				Squared Edge					Total
Direct materials		$	9,600			$	21,500		$	31,100
Direct labor			6,200				11,800			18,000
Overhead (300% of direct labor cost)			18,600				35,400			54,000
Total cost		$	34,400			$	68,700		$	103,100
Quantity produced			10,400	ft.			14,100	ft.
Average cost per ft. (rounded)		$	3.31			$	4.87

Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

Overhead Cost Category (Activity Cost Pool)	Cost
Supervision		$	2,160
Depreciation of machinery			28,840
Assembly line preparation			23,000
Total overhead		$	54,000

She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)

		Usage
Overhead Cost Category (Activity Cost Pool)	Driver	Rounded Edge			Squared Edge			Total
Supervision	Direct labor cost ($)	$	6,200		$	11,800		$	18,000
Depreciation of machinery	Machine hours		300	hours		600	hours		900	hours
Assembly line preparation	Setups (number)		31	times		93	times		124	times

Required:

6 Check my work Exercise 17-14 Activity-based costing LO P3 A2 Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. 5 ooints Rounded Edge Squared Edge 9,600 6,200 18,600 Direct materials Total 31,100 18,000 54,000 Skipped $21,500 11,800 35,400 Direct labor Overhead (3008 of direct labor cost) Total cost $34,400 $68,700 $103,100 eBook Quantity produced Average cost per ft. (rounded) 10,400 ft. 14,100 ft Hint 3.31 4.87 Print Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead Cost $ 2,160 28,840 23,000 References References $54,000 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) References References References Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) References References Rounded Edge Squared Edqe $11,800 600 hours 93 times Total $6,200 300 hours 31 times $18,000 References 900 hours 124 times References Required: 1. Assign these three overhead cost pools to each of the two products using ABC. References Overhead Cost Activity References Activity Drivers Activity Rate Supervision References References Direct labor cost % Depreciation of machinery Machine hours Assembly line preparation Setups References Activity driver incurred Rounded edge Activity rate Overhead assigned References Supervision % 0 Depreciation of machinery 0 Assembly line preparation 0 References Activity driver incurred Squared edge Activity rate Overhead assigned Components Supervision % 0 Depreciation of machinery 0 Assembly line preparation 0 2. Determine average cost per foot for each of the two products using ABC Rounded edge Squared edge