Gregory Enterprises

Gregory Enterprises is a manufacture, which producing customized bikes for other companies. Currently, the company has considered to switch to ABC to calculate the manufacture overhead costs.

It has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool	Overhead Costs	Cost driver	Activity level
Supervision of direct labour	$320,000	Direct labour hours	800,000
Machine maintenance	$120,000	Machine hours	960,000
Facility rent	$200,000	Square metres of area	100,000
Total overhead costs	$640,000

The accounting records show the Mossman Job consumed the following resources:

The accounting records show the Mossman Job consumed the following resources: Cost driver	Actual level
Direct labour-hours	200
Machine-hours	1,600
Square metres of area	50

Required:

If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job? What is the activity rate for machine maintenance costs?

If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job?