S4-6. Calculate a job cost using ABC (Learning Objective 2) Oliver Industries, a small, family-run manufacturer, has adopted an ABC system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: Activity Machine setup Machining. Quality control Estimated Total Manufacturing Overhead Costs Estimated Total Usage of Cost Driver 3,050 setups $ 161,650 $1,100,000 5,000 machine hours $ 360,000 4,500 tests run During May, Jeff and Arabella Oliver machined and assembled Job 557. Jeff worked a total of 10 hours on the job, while Arabella worked 4 hours on the job. Jeff is paid a $25 per hour wage rate, while Arabella is paid $28 per hour because of her additional experience level. Direct materials requisitioned for Job 557 totaled $1,250. The following additional information was collected on Job 557: the job required 2 machine setups, 6 machine hours, and 3 quality control tests. 1. Compute the activity cost allocation rates for the year. 2. Complete the following job cost record for Job 557: Job Cost Record Job 557 Direct materials.. Direct labor Manufacturing overhead Total job cost........... Solution: See next page. Manufacturing Costs $? Total job cost. Solution: See next page. Req. 1 $? Activity Machine setup Machining Quality control Estimated Total Manufacturing Overhead Costs (A) $161,650 of Cost Driver Estimated Total Usage Activity Cost Allocation Rate (A+B) (B) 3,050 setups $ 53 per setup $ 1,100,000 5,000 machine hours $220 per machine hour $360,000 4,500 tests run 580 per QC test Req. 2 Direct Materials Direct Labor: Job Cost Record JOB #557 Jeff: 10 x $25-$250 Arabella: 4 x $28-$112 Manufacturing Overhead: ((2 x $53)+(6 x $220)+(3x580) TOTALJOB COST Manufacturing Costs $1,250 362 1.666 $3.278