Ste! 1) 2) 3) 4) Assign overhead costs to department cost pools Select an allocation base for each department Compute overhead allocation rates for each department Use the departmental overhead rates to assign overhead costs to cost objects Total overhead costs Department 1 Department 2 Department 3 18,000,000 17,000,000 (35,000,000) Management needs to determine breakout Total Labor Hours Used Per Unit Department 1 No. of Products Labor Hours Total Depart 1 Hours Total Depart 2 Hours Total Depart 2 Hours per Unit Department 2 Labor Hours per product 2 8 11 Department 2 Labor Hours per product 14 5 20 Product 1 3 Product 2 Product 3 1,500 25,000 15,000 4 12 7 1 2 3 4 Department 1 Overhead rate 5 Department 2 Overhead Rate 26 Departmetn 3 Overhead Rate 7 - N 1 Comparison of Plantwide, Departmental, and ABC Costing 3 4 Product 1 Total Overhead Allocated Product 2 Product 3 5 Allocation Method 6 7 Plantwide 8 Departmental 9 ABC 10 $ $ $ $ $ $ $ $ $ $ $ $ $ 12 Plantwide vs Departmental 13 Difference per unit . $ $ $ $ $ S 15 Plantwide vs ABC 16 Difference per unit 17 18. Departmental vs ABC 19 Difference per unit $ $ $ D Activity Rate 15 16 Activity Rate Expected Activity 17 Activity Cost Pool Activity Driver Level 18 Craftsmanship Direct Labor 300,000 19 Set up Batches 20,000 20 Design Modification Designs 100,000 21 Plant Services Square Footage 150,000 22 23 Activity Level per Product Overhead Cost Assigned to Pool 20,000,000 10,000,000 7,375,482 30,000,000 per DLR per batch per design per 24 25 Craftsmanship 26 Set-up 27 Design Modification 28 Plant Services 29 Product 1 150,000 10,000 30 000 15,000 Product 2 100,000 2,500 50,000 55,000 Product 3 50,000 7500 20,000 80,000 Total Activity Level 300,000 20,000 100,000 150,000 Total Activity Cost Assigned Product 1 Product 2 Product 3 30 31 Craftsmanship 32 Set-up 33 Design Modification 34 Plant Services 35 36 Total Costs Assigned 37 Unit Total Labor Hours Required Product 1 Product 2 Product 3 Number of Units 1,500 25,000 15,000 Direct Labor Hours per unit 20.00 25.00 38.00 Budgeted Costs Indirect labor costs Single Plant Wide Overhead Rate Per direct labor hour 40,375,482 Overhead per unit Factory utifrites Factory Insurance Misic indirect expenses 10,000,000 2,000,000 15,000,000 Product 1 Product 2 Products Ste! 1) 2) 3) 4) Assign overhead costs to department cost pools Select an allocation base for each department Compute overhead allocation rates for each department Use the departmental overhead rates to assign overhead costs to cost objects Total overhead costs Department 1 Department 2 Department 3 18,000,000 17,000,000 (35,000,000) Management needs to determine breakout Total Labor Hours Used Per Unit Department 1 No. of Products Labor Hours Total Depart 1 Hours Total Depart 2 Hours Total Depart 2 Hours per Unit Department 2 Labor Hours per product 2 8 11 Department 2 Labor Hours per product 14 5 20 Product 1 3 Product 2 Product 3 1,500 25,000 15,000 4 12 7 1 2 3 4 Department 1 Overhead rate 5 Department 2 Overhead Rate 26 Departmetn 3 Overhead Rate 7 - N 1 Comparison of Plantwide, Departmental, and ABC Costing 3 4 Product 1 Total Overhead Allocated Product 2 Product 3 5 Allocation Method 6 7 Plantwide 8 Departmental 9 ABC 10 $ $ $ $ $ $ $ $ $ $ $ $ $ 12 Plantwide vs Departmental 13 Difference per unit . $ $ $ $ $ S 15 Plantwide vs ABC 16 Difference per unit 17 18. Departmental vs ABC 19 Difference per unit $ $ $ D Activity Rate 15 16 Activity Rate Expected Activity 17 Activity Cost Pool Activity Driver Level 18 Craftsmanship Direct Labor 300,000 19 Set up Batches 20,000 20 Design Modification Designs 100,000 21 Plant Services Square Footage 150,000 22 23 Activity Level per Product Overhead Cost Assigned to Pool 20,000,000 10,000,000 7,375,482 30,000,000 per DLR per batch per design per 24 25 Craftsmanship 26 Set-up 27 Design Modification 28 Plant Services 29 Product 1 150,000 10,000 30 000 15,000 Product 2 100,000 2,500 50,000 55,000 Product 3 50,000 7500 20,000 80,000 Total Activity Level 300,000 20,000 100,000 150,000 Total Activity Cost Assigned Product 1 Product 2 Product 3 30 31 Craftsmanship 32 Set-up 33 Design Modification 34 Plant Services 35 36 Total Costs Assigned 37 Unit Total Labor Hours Required Product 1 Product 2 Product 3 Number of Units 1,500 25,000 15,000 Direct Labor Hours per unit 20.00 25.00 38.00 Budgeted Costs Indirect labor costs Single Plant Wide Overhead Rate Per direct labor hour 40,375,482 Overhead per unit Factory utifrites Factory Insurance Misic indirect expenses 10,000,000 2,000,000 15,000,000 Product 1 Product 2 Products
