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 (3008 of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,300 6,200 18,600 $34,100 10,500 ft. $ 3.25 Squared Edge Total $21,500 $ 30,800 11,900 18,100 35,700 54,300 $69,100 $ 103,200 14,100 ft. 4.90 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,300 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 Cont Category (Activity Cost Pool) Supervision $ 2,172 Depreciation of machinery Assembly line preparation Total overhead Cost 29,000 23, 128 $54,300 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 Driver Direct labor cost (5) Machine hours Rounded Edge Squared Edge $6,200 $11.900 300 hours 600 hours Total $18, 100 900 hours Activity Rate % 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 Assembly line preparation Setups Rounded edge Activity rate Supervision % Depreciation of machinery Assembly line preparation Activity driver Incurred Overhead assigned Activity rate Activity driver Incurred Overhead assigned 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 Cast Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead $ 2.172 29,000 23,128 $54,300 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,200 300 hours 32 times Squared Edge $11,900 600 hours 94 times Total $18,100 900 hours 126 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 Assembly line preparation Setups Activity Rate % Rounded edge Activity rate Activity driver incurred Overhead assigned % 0 Supervision Depreciation of machinery Assembly line preparation 0 0 Activity rate Squared edge Activity driver incurred Overhead assigned
