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i need help filling out the blanks please! Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas
i need help filling out the blanks please!
Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Billing Digging trenches Janitorial Machine maintenance Machine setups Molding Packaging Payroll Plant supervision Product design Purchasing materials Selling Testing Welding Using the following information, determine the overhead rates and the actual cost assigned for each of the activity cost pools in a possible ABC system for Waterways. (Round answers to 2 decimal places, e.g. 12.25.) WATERWAYS CORPORATION Estimated Overhead $1,857,000 Expected Use of Cost Drivers per Activity 12,380 Actual Use of Drivers 12,364 33,829,000 2,625 traced directly 1,691,400 Activity Cost Pools Cost Drivers Irrigation installation Labor cost Machining (all machine use) Machine hours Customer orders Number of orders Shipping none (direct) Design Cost per design Selling Number of sales calls 33,828,000 34.580 2,660 N/A N/A 888 8 7 380,800 23,800 24,010 WATERWAYS CORPORATION Activity Based Overhead Rates Activity Cost Pools Actual Cost Assigned Irrigation installation $ Machining (all machine use) Customer orders Design Selling Step by Step Solution
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