Question
Lab Topic Chapter 4 Piedmont Computer Company uses a job order costing system in which each batch manufactured is a different job. Piedmont Computer
Lab Topic Chapter 4 Piedmont Computer Company uses a job order costing system in which each batch manufactured is a different job. Piedmont Computer Company assigns direct materials and direct labor to each job. The company assigns labor costs at $25 per hour. It allocates manufacturing overhead to jobs based on a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2020, the controller prepared the following budget: Manufacturing overhead Direct labor costs $ 290,000 $ 1,160,000 Budgeted Manufacturing The controller also noted that three cost pools make up the manufacturing overhead: Estimated Cost Driver Activity Cost Pool Assembly Programming Overhead Cost Driver for the Year $235,000 Number of parts 940,000 $35,000 Number of direct labor hours 10,000 Testing $20,000 Number of tests 160 In November 2020, Piedmont Computer Company worked on several jobs. Records for two jobs appear here: Job 721 Job 722 Direct labor hours 780 hours Direct materials $ 23,400 60 hours $2,500 Total number of parts Total number of tests 2,500 8 300 2 Requirements: Be sure to show all work to arrive at the answers below and include text labels for items in your calculations so it is clear what you did. 1. Compute Piedmont Computer Company's total of Job 721 using the traditional plantwide manufacturing overhead rate based on a percentage of direct labor cost. 2. Compute the total cost of Job 721 using activity-based costing. 3. Why does the job cost differ between a traditional plantwide allocation vs. activity-based costing?
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