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Question 3 of 3 Cullumber Steel Company has budgeted manufacturing overhead costs of $1,974,000. It has allocated overhead on a plant-wide basis to its two
Question 3 of 3 Cullumber Steel Company has budgeted manufacturing overhead costs of $1,974,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Centre Material handling Purchase orders Product testing Machine set-up Machining Direct labour costs Direct materials costs Purchase orders Cost Driver Number of moves Machine set-up Number of orders Each unit of the products requires the following: Number of tests Number of set-ups Machine hours $300 $120 Soft Steel Hard Steel 2 Estimated Overhead $294,000 5 $105,000 $440,000 $325,000 $810,000 $200 $60 3. 10 k Estimated Activity 42,000 moves 1,400 orders 4,000 tests 0.33/1 5,000 set-ups 100,000 machine hours
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