Question 2: Walker Co. designs and builds computer servers for data centers. They use job costing to determine the cost of the systems that they install which consist of server racks. Each system requires a different number of server racks to be installed. Use the forecasts below to determine the total cost of each customer's system. One manager must be hired for every twenty direct labor hours that will be spent on installations in total (round up for fractions), and the advertising expenses are used to run local television advertisements in the hopes of enticing new business. The cost of a typical project is shown below, along with details about several customer orders. Direct Materials Direct Labor Manager Salary Advertising Expenses Direct Labor Time $5,000 per server rack $60 per hour $3,000 per person $10,000 per month 2 hours per server rack Hours Alice Ben 20 Chris 8 Doris 14 15 30 Customers Alice Ben Chris Doris Size of System in Racks 10 4 7 (A) What driver should Walker Co use for each of the overhead above? Why? The correct choice will be something that you have data for in every case. (B) Using the drivers you chose in part A calculate the per unit cost to be allocated. Use cell references whenever possible. Manager Salaries Advertising Driver Chosen Driver Chosen Total Forecast Cost Driver Total Cost Driver Total Forecast Overhead Total Overhead Allocated Cost per Unit of the Driver Allocated Cost per Unit of the Driver (9) Calculate the total cost for each customer using the template provided below. Use cell references whenever possible. Alice Ben Chris Doris Customer Direct Costs Direct Materials ($) Direct Labor ($) Overhead Costs Allocated Overhead ($) Total Costs ($) Question 2: Walker Co. designs and builds computer servers for data centers. They use job costing to determine the cost of the systems that they install which consist of server racks. Each system requires a different number of server racks to be installed. Use the forecasts below to determine the total cost of each customer's system. One manager must be hired for every twenty direct labor hours that will be spent on installations in total (round up for fractions), and the advertising expenses are used to run local television advertisements in the hopes of enticing new business. The cost of a typical project is shown below, along with details about several customer orders. Direct Materials Direct Labor Manager Salary Advertising Expenses Direct Labor Time $5,000 per server rack $60 per hour $3,000 per person $10,000 per month 2 hours per server rack Hours Alice Ben 20 Chris 8 Doris 14 15 30 Customers Alice Ben Chris Doris Size of System in Racks 10 4 7 (A) What driver should Walker Co use for each of the overhead above? Why? The correct choice will be something that you have data for in every case. (B) Using the drivers you chose in part A calculate the per unit cost to be allocated. Use cell references whenever possible. Manager Salaries Advertising Driver Chosen Driver Chosen Total Forecast Cost Driver Total Cost Driver Total Forecast Overhead Total Overhead Allocated Cost per Unit of the Driver Allocated Cost per Unit of the Driver (9) Calculate the total cost for each customer using the template provided below. Use cell references whenever possible. Alice Ben Chris Doris Customer Direct Costs Direct Materials ($) Direct Labor ($) Overhead Costs Allocated Overhead ($) Total Costs ($)
