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 lobor Overhead (100% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $9,500 6,200 18 600 $ 34,300 10,700 Ft 53.21 Sad Edge $21,800 11,500 35100 $ 60,000 14.000 Ft $ 4.93 Total $ 31,300 10,000 54,000 $103,300 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 Cost Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead $ 2,160 28,840 23,000 $ 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 noduct lines (Pounctum 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. Houte de $9,500 5,200 Direct materials Direct labor Overhead (1098 of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Yotal $ 21,00 $ 31,00 18.000 35,400 54,000 $ 69,000 $ 103, 100 14,000 ft. $ 34,100 10,700 Ft $3.21 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 23,00 $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.) Overhead Cost Category (Activity Cast Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost (5) Machine hours Setups (number) Iounded Edge $6,200 400 hours 32 times Squared Edge $11,800 800 hours 93 times Total $18,000 1,200 hours 125 times Required: 1. Assign these three overhead cost pools to each of the two products using ABG Activity Overhead Cost Activity Drivers Supervision $ 2 160 $ 6 200 Direct labor cost Depreciation of machinery 28,840 400 Machine hours Assembly fine preparation 23,000 32 Setups Activity Rate 9 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 0 Depreciation of machinery Assembly line preparation 0 Activity rate Activity driver incurred Overhead assigned Squared edge Components Supervision Depreciation of machinery Assembly line preparation % lo 0 0 2. Determine average cost per foot for each of the two products using ABC. unded edge Squared edge
