Question
Northwest Company produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports
Northwest Company produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. (Round activity rate and cost per foot answers to 2 decimal places.)
Northwests controller wishes to apply activity-based costing (ABC) to allocate the $53,700 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.
She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines.
Rounded Edge Squared Edge Total Direct materials Direct labor overhead (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) $ 9,500 6,000 18,000 $33,500 $21,700 11,900 35,700 $69,300 $ 31,200 17,900 53,700 $102,800 10,500 ft. $ 3.19 14,100 ft. $ 4.91
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