Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show calculation please John Manufacturing (JM) manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer

Show calculation please image text in transcribed
image text in transcribed
John Manufacturing (JM) manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct material and direct manufacturing labor costs are traced directly to each order. JM's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs: $480,000 60,000 120,000 Wages and salaries Depredation Rent Other overhead Total overhead costs $900,000 JM has established four activity cost pools and the following budgeted activity for each cost pool: Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing laborNumber of direct manufacturing Activity Measure 30,000 direct manufacturing support Order processing Design support Other labor-hours Number of customer orders Number of custom design-hours 2,490 custom design bours Facility-sustaining costs allocated 30,000 direct manufacturing 500 orders to orders based on direct manufacturing labor-hours labor-hours Some customer orders require more complex designs, while others need simple designs. JM estimates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1.410 design-hours. It estimates it will do 180 simple designs, which will each take6 hours for a total of 1.080 design-hours

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Richard Lewis, David Pendrill

6th Edition

0273638335, 978-0273638339

More Books

Students also viewed these Accounting questions