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Here are some things to note: a) Typically we use budgeted MOH costs and budgeted activity levels to create MOH allocation rates. The 2007
Here are some things to note: a) Typically we use budgeted MOH costs and budgeted activity levels to create MOH allocation rates. The 2007 activity costs from Exhibit 4 of the case are the budgeted" costs, and 2007 activity driver information are the "budgeted" quantity of the allocation bases. b) When taking numbers from the Exhibits in the case, be sure to pay attention to whether the numbers are given in $$, thousands of $$, physical units, etc. c) The total $$ volume of inventory stored at Jamestown is $16,630,890. The average dollar volume of inventory stored for a given customer can be estimated with this formula: CGS for customer * (customer's average number of days in inventory 365) d) Don't try to create separate allocation rates for automotive and non-automotive customers. The case provides no reason to believe that the costs of holding a given amount of inventory or processing an order of a given size are different for these two customer types. e) Assume that there is no difference in $$ size of order between orders that require special services and orders that do not. (Thus if 10% of a customer's orders require special services, then this represents 10% of its $$ volume of sales.)
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