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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

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 $ 9,400 $ 21,400 $ 30,800
Direct labor 6,000 11,900 17,900
Overhead (300% of direct labor cost) 18,000 35,700 53,700
Total cost $ 33,400 $ 69,000 $ 102,400
Quantity produced 10,500 ft. 14,000 ft.
Average cost per ft. (rounded) $ 3.18 $ 4.93

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) Cost
Supervision $ 2,148
Depreciation of machinery 28,680
Assembly line preparation 22,872
Total overhead $ 53,700

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.)

Usage
Overhead Cost Category (Activity Cost Pool) Driver Rounded Edge Squared Edge Total
Supervision Direct labor cost ($) $ 6,000 $ 11,900 $ 17,900
Depreciation of machinery Machine hours 400 hours 700 hours 1,100 hours
Assembly line preparation Setups (number) 32 times 94 times 126 times

image text in transcribed

Activity Rate 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 Rounded edge Activity rate Supervision % 0 Depreciation of machinery Assembly line preparation Activity driver incurred Overhead assigned 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

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