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SP 17 Serial Problem Business Solutions (Algo) LO P3 After reading an article about activity-based costing in a trade journal for the furniture industry,
SP 17 Serial Problem Business Solutions (Algo) LO P3 After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total Budgeted Cost $ 24,650 4,500 9,000 $ 38,150 The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours Required: $ 2,500 $ 4,000 $ Budgeted Activity Usage 29 setups 4,500 parts inspected 4,500 machine hours (MH) 5 setups 460 parts inspected 640 machine hours 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 4,500 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (c) Compute total product cost of Job 615.
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