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 $ 9,300 $21,800 $ 31, 100 Direct labor 6,160 11,800 Overhead (3001 of direct labor cost) 17,990 18,300 35,400 53,700 Total cost $33,700 $69,800 $102,700 Quantity produced 10,500 ft. 14,200 ft. Average cost per ft. (rounded) $ 3.21 $ 4.86 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $53,700 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 $ 2,148 28.680 22.872 553,700 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.) Overhead Cost Category Activity Cost Pool Supervision Depreciation of machinery Assembly Line preparation Driver Direct labor cost (5) Machine hours Setups (number) Rounded Edge Squared Edge 56,100 $11,800 300 hours 700 hours 30 times 94 times Total $17.900 1.000 hours 124 times Required: Questions 17 Seved Help Save & Exit 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 Totat Supervision Direct labor cost (5) 56,100 $11,800 $17,900 Depreciation of machinery Machine hours 300 hours 700 hours 1,000 hours Assembly Line preparation Setups (number) 30 times 94 times 124 times Required: 1. Assign these three overhead coat pools to each of the two products using ABC. Activity Overhead Cost Activity Drivers Supervision Direct labor cost Depreciation of machinery Machine hours Assembly line preparation Setups Activity Rate Rounded edge Activity rate Activity driver Incurred Overhead assigned Supervision Depreciation of machinery Assembly line preparation Activity rate Activity driver Incurred Overhead assigned Squared edge Components Supervision Depreciation of machinery Assembly line preparation % Activity rate Activity driver incurred Overhead as: Squared edge Components Supervision Depreciation of machinery Assembly line preparation % 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge
