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Neal Company manufactures computer workstations. The companys three activities and their overhead cost drivers follow. Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Fabrication
Neal Company manufactures computer workstations. The company’s three activities and their overhead cost drivers follow.
Activity | Budgeted Cost | Activity Cost Driver | Budgeted Activity Usage | |
---|---|---|---|---|
Fabrication | $ 80,000 | Machine hours | 1,600 | machine hours |
Assembly | 96,000 | Direct labor hours | 2,000 | direct labor hours |
Inspection | 72,000 | Units inspected | 6,000 | units |
Job 101’s actual activity usage along with a partial customer profitability report follow.
Machine Hours | Direct Labor Hours | Units | |||
---|---|---|---|---|---|
Job 101 | 25 | MH | 30 | DLH | 10 |
Profitability Report—Job 101 | ||
---|---|---|
Sales | $ 8,500 | |
Cost of goods sold | ||
Direct materials | $ 1,940 | |
Direct labor | 750 | |
Overhead | ? | ? |
Gross profit | ? | |
Customer service costs | 500 | |
Customer income | ? |
Required:
1. Compute activity rates using activity-based costing.
2. Use the results from part 1 to allocate overhead cost to Job 101.
3. Complete the profitability report for Job 101.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
1 Computation of activity rates using activitybased costing Activity ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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