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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. Direct materials Direct labor Overhead (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge Squared Edge Total $ 9,300 $21,600 $ 30,900 6,000 12,000 18,000 18,000 36,000 54,000 $33,300 $69,600 $102,900 10,500 ft. 14,200 ft. $ 3.17 $ 4.90 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 product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Rounded Edge $6,000 Driver Direct labor cost ($) Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Squared Edge Total $12,000 $18,000 Machine hours 300 hours 600 hours 900 hours Setups (number) 32 times 94 times 126 times Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Activity Activity Cost Drivers Activity Rate Direct labor Supervision % cost Depreciation of Machine machinery hours Assembly line Setups preparation Activity Rounded edge Activity rate driver incurred Supervision % 0 Depreciation of 0 machinery Assembly line 0 preparation Overhead assigned Squared edge Activity rate Activity driver incurred Overhead assigned % 0 Components Supervision Depreciation of machinery Assembly line preparation 0 0 2. Determine average cost per foot for each of the two products using ABC. Rounded Squared edge edge Smythe Co. makes furniture. The following data are taken from its production plans for the year. Direct labor costs $5,620,000 Hazardous waste disposal 615,000 costs Chairs Expected production 206,000 units Direct labor hours 266,000 DLH required Hazardous waste disposed 500 pounds Tables 21,000 units 15,200 DLH 500 pounds Required: 1. Determine the hazardous waste disposal cost per unit for chairs and for tables if costs are assigned using a single plantwide overhead rate based on direct labor hours. 0 Product Activity Driver Units Produced OH Cost per unit OH $ per Total Overhead direct labor Cost hour $ 0.00 $ $ 0.00 $ Chairs Tables 0 0 0 0 2. Determine hazardous waste disposal costs per unit for chairs and for tables if costs are assigned based on the number of pounds disposed of. 0 Product Activity Driver Units Produced OH $ per Total Overhead pound Cost $ 0.00 $ $ 0.00 $ OH Cost per unit 0 0 Chairs Tables 0 0
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