Question
Spin cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead cost
Spin cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead cost to the projects. The activities and related overhead costs are as follows: initial concept formation $40,000, design $300,000, and construction oversight $100,000. The cost drivers and expected use are as follows.
Activities Cost Drivers Expected use of cost drivers per activity
Initial concept formation Number of project changes 20
Design Square Feet 150,000
Construction Oversight Number of Months 100
(a) Compare the predetermined overhead rate for each activity. (b) Classify each of these activities as unit-level, batch-level, product-level, or facility-level
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