Managerial Accounting

Cuendet Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $600,000 in overhead costs when a total of 10,000 direct labor hours were incurred. After implementing activity-based costing (ABC), the company's accountant identified the following related information:

Activity	Allocation Base (Driver)	Overhead Cost
Material handling	Number of deliveries	$180,000
Inspections	Number of inspections	$150,000
Supervision	Hours of supervisor time	$120,000
Purchasing	Number of purchase orders	$150,000

The number of activities for standard and custom-made cabinets is as follows:

	Standard		Custom-made
Number of deliveries	500		700
Number of inspections	600		400
Hours of supervisor time	1,000		2,000
Number of purchase orders	800		400

During the past year, Cuendet accepted a customer order for a set of custom-made cabinets that would require the following:

Direct labor hours	45
Number of deliveries	4
Number of inspections	5
Hours of supervisor time	2
Number of purchase orders	4

Required:

A. How much overhead would be applied to the job if traditional costing using direct labor hours as the cost driver were used? (5 points) B. Using activity-based costing (ABC), what would be the overhead rate for each of the four activities? (10 points) C. Using activity-based costing (ABC), what would be the total overhead applied to the above job? (5 points)