Question
Snazy Chairs (a specialised chair manufacturer) had identified the following overhead activities, costs and activity drivers at the beginning of the year: Activity Expected Cost
Snazy Chairs (a specialised chair manufacturer) had identified the following overhead activities,
costs and activity drivers at the beginning of the year:
Activity Expected Cost Activity Driver Activity Capacity
Setup Costs $60,000 Number of setups 300
Ordering costs $45,000 Number of orders 4,500
Machine costs $90,000 Machine hours 18,000
Receiving costs 25,000 Number of parts 50,000
$220,000
Assume for simplicity that each activity corresponds to a process. The following two jobs were recently completed:
Comfort Chairs Plush chairs
Direct materials (per batch) $750 $850
Direct labour (50 hours per
batch) $600 $600
Units in each batch 10 5
Number of setups 1 1
Number of orders 4 2
Machine hours 20 30
Parts used 20 40
One measure of the company
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