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 (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,400 6, 200 18,600 $34,200 10,700 ft. $ 3.20 Squared Edge Total $21,500 $ 30,900 11,900 18,100 35, 700 54,300 $69,100 $103,300 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. Cost 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 31 times Squared Edge $11,900 800 hours 93 times Total $18, 100 1,100 hours 124 times X Answer is complete but not entirely correct. Activity Rate 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Activity Activity Cost Drivers Supervision $ 2,172 18,100 Direct labor cost Depreciation of machinery 29,000 36 X Machine hours Assembly line preparation 23,128 123 X Setups 12.00 % of direct labor cost $ 36.25 X Per machine hour $ 188.03 Per setup Rounded edge Activity rate Activity driver incurred 6,200 Overhead assigned 12.00 % of direct labor cost $ $ 744 Supervision Depreciation of machinery Assembly line preparation $ 36.25 X Per machine hour 300 7,250 X $ 188.03 X Per setup 31 5,829 13,823 Total overhead cost $ Squared edge Activity rate Activity driver incurred Overhead assigned 12.00 % of direct labor cost $ 11,900 $ 1,428 Components Supervision Depreciation of machinery Assembly line preparation $ 36.25 Per machine hour 800 $ 188.03 Per setup 93 29,000 17,487 47,915 Total overhead cost $ $ 2. Determine average cost per foot for each of the two products using ABC. Rounded Squared edge edge Total direct material cost 9,400 21,500 Total direct labor cost 6,200 11,900 Total overhead cost(ABC) 13,635 40,665 X Total manufacturing cost $ 29,235 $ 74,065 Total production(feet) 10,700 14,200 X Average cost per foot 2.73 X $ 5.22 x $
