Exercise 17-17 Activity-based costing LO P3

Exercise 17-17 Activity-based costing LO P3 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. Direct materials Direct labor Overhead (382% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,38 6,180 18,300 $ 33,700 18,700 ft. $ 3.15 Squared Edge Total $ 21,600 $ 39,900 11,980 18,eee 35,700 54,888 $ 69,280 $102,900 14,100 tt. $ 4.91 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 23,600 $ 54, eee 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) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,188 380 hours 31 times Squared Edge $11.988 700 hours 93 times Total $18,eee 1,000 hours 124 times Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Activity Overhead Cost Activity Drivers Supervision Direct labor cost Depreciation of machinery Machine hours Activity Rate 30 Assembly line preparation Setups Rounded edge Activity rate Activity driver incurred Overhead assigned % 0 Supervision Depreciation of machinery Assembly line preparation 0 0 Activity rate Activity driver incurred Overhead assigned Squared edge Components Supervision Depreciation of machinery Assembly line preparation % 0 0 0 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge Exercise 17-18 Activity-based costing LO P3 Surgery Center is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 40% As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinic's three activity cost pools and their cost drivers follow. Activity Cost Pool Cost Cost Driver Driver Quantity Professional salaries $2,128,eee Professional hours 11,200 Patient services and supplies 36,720 Number of patients 728 Building cost 218,660 Square feet 1,620 The two main surgical units and their related data follow. Service General Surgery Orthopedic surgery Hours 3,100 8,100 Square Feet+ Patients 668 460 960 260 - Orthopedic surgery requires more space for patients, supplies, and equipment. Required: 1. & 2 Compute the cost per cost driver for each of the three activity cost pools. Use the results to allocate costs to both the general surgery and the orthopedic surgery units. Compute total cost and average cost per patient for both the general surgery and the orthopedic surgery units. (Round your final answers to whole dollar.) Orthopedic Surgery General Surgery Activity driver Overhead incurred assigned Activity Overhead Cost Activity Drivers Activity driver Overhead assigned Activity Rate incurred Professional salaries Patient services and supplies Building cost Professional hours Number of patients Square feet