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 $ 9,700 6,000 18,000 $ 33,700 10,500 ft. $ 3.21 Squared Edge Total $ 21,600 $ 31,300 11,800 17,800 35,400 53,400 $ 68,800 $ 102,500 14,200 ft. $ 4.85 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $53,400 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 $ 2,136 28,520 22,744 $ 53,400 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 $6,000 200 hours 32 times Squared Edge $11,800 600 hours 93 times Total $17,800 800 hours 125 times Required: She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,000 200 hours 32 times Squared Edge $11,800 600 hours 93 times Total $17,800 800 hours 125 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 Activity rate Activity driver incurred Overhead assigned Rounded edge Supervision Depreciation of machinery Assembly line preparation Activity rate Activity driver incurred Overhead assigned Squared edge Components Supervision Depreciation of machinery Assembly line preparation % 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Cost Activity Drivers Activity Rate Direct labor cost % Activity Supervision Depreciation of machinery Assembly line preparation Machine hours Setups Rounded edge Activity rate Activity driver incurred Overhead assigned Supervision Depreciation of machinery Assembly line preparation Squared edge Activity rate Activity driver incurred Overhead assigned % 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
