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Harper Printers has contracts to complete weekly supplements required by forty-six customers. Currently, Harper is using a single plantwide overhead rate based on the number
Harper Printers has contracts to complete weekly supplements required by forty-six customers. Currently, Harper is using a single plantwide overhead rate based on the number of pages for the allocation of its manufacturing overhead costs to jobs. For the upcoming year, manufacturing overhead cost is estimated to be total $500,000 for an annual production capacity of 12,500,000 pages. Harper Printers has decided to evaluate the use of Activity Based Costing for the allocation of manufacturing overhead costs. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary drivers of manufacturing overhead costs. The following information was gathered during the analysis: Cost pool/activity Manufacturing overhead Activity level costs Design changes $100,000 250 design changes Setups $320,000 5,000 setups 8,000 Inspections $80,000 inspections Total manufacturing $500.000 overhead costs During year, Johnson Company Job 101) used the following printing services: Job 101.Johnson Company Pages 80,000 Design 10 changes Setups Inspections 30 Using activity based costing method, what would be the amount of factory overhead cost assigned to Job101. Johnson Company? Using current plantwide overhead rate based upon number of pages, what would be the amount of factory overhead cost assigned to Job 101-Johnson Company
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