Overhead Cost Pool

Budgeted

Budgeted Level

Overhead

Overhead Cost

for Cost Driver

Cost Driver

Materials handling

$179,630

3,630

pounds

Weight materials

Machine setup

$15,050

420

setups

Number of setups

Machine repair

$1,550

34,160

machine hours

Machine hours

Inspections

$12,090

180

inspections

Number of inspections

Requirements for Job #971 which manufactured 34,160 units of product

Direct labor

20

hours

Direct materials

150

pounds

Machine setups

30

setups

Machine hours

17,430

machine hours

Inspections

17

inspections

Using ABC, overhead cost assigned to Job #971 for machine setup is:

$1,142

$791

$1,075

$7,423

$1,597

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model

Annual Sales in Units

High F

11,130

Great P

18,160

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

High F

Great P

Direct materials

$42.66

$28.42

Direct labor

$20.14

$14.25

Budgeted Factory Overhead

Engineering and Design

2,700

engineering hours

$471,317

Quality Control

14,780

inspection hours

$305,654

Machinery

38,050

machine hours

$617,576

Miscellaneous Overhead

30,240

direct labor hours

$151,542

Total

$1,546,089

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

High F

Great P

Engineering and design hours

1,104

1,580

Quality control inspection hours

6,319

7,890

Machine hours

22,347

15,110

Labor hours

13,490

16,380

Using activity-based costing, applied quality control factory overhead for the High F model per unit is (rounded to the nearest cent):

$32.59

$15.19

$6.07

$11.74

$8.98

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

Model

Annual Sales in Units

High F

11,130

Great P

18,160

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

High F

Great P

Direct materials

$42.66

$28.42

Direct labor

$20.14

$14.25

Budgeted Factory Overhead

Engineering and Design

2,700

engineering hours

$471,317

Quality Control

14,780

inspection hours

$305,654

Machinery

38,050

machine hours

$617,576

Miscellaneous Overhead

30,240

direct labor hours

$151,542

Total

$1,546,089

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

High F

Great P

Engineering and design hours

1,104

1,580

Quality control inspection hours

6,319

7,890

Machine hours

22,347

15,110

Labor hours

13,490

16,380

Using activity-based costing, applied quality control factory overhead for the Great P model per unit is (rounded to the nearest cent):

$11.74

$4.52

$17.32

$8.98

$13.50

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:
	Overhead Cost Pools			Cost Driver			Overhead Cost			Budgeted Level
										for Cost Driver
Quality control				Number of inspections			$72,710			1,220
Machine operations				Machine hours			$147,290			1,250
Materials handling				Number of batches			$1,000			33
Miscellaneous overhead cost				Direct labor hours			$50,840			4,490
Sheen Co. has an order for 1,130 laser printers that has the following production requirements:
	Number of inspections			200
	Machine hours			200
	Number of batches			5
	Direct labor hours			710
Using activity-based costing, applied number of inspections overhead for the 1,130 laser printers order is:
$23,566
$11,420
$43,677
$152
$11,920