Question
Sunshine Ltd has estimated the following activity cost pools and activity drivers for the coming year: Activity Budgeted overhead cost Activity driver Budgeted level for
Sunshine Ltd has estimated the following activity cost pools and activity drivers for the coming year:
Activity
Budgeted overhead cost
Activity driver
Budgeted level for activity driver
Machine setups
$200,000
No. of setups
100 setups
Material handling
$100,000
Weight of raw material
50,000 kilograms
Hazardous waste control
$50,000
Weight of hazardous chemicals used
10,000 kilograms
Quality control
$75,000
No. of inspections
1,000 inspections
Other overhead costs
$200,000
Machine hours
20,000 machine hours
TOTAL
$625,000
Sunshine Ltd has received an order for 1000 boxes of film development chemicals. In addition to direct material costing $120 per box and direct labour costing $40 per box, the order has the following production requirements:
Machine setups4 setups
Raw material10,000 kilograms
Hazardous materials2,000 kilograms
Inspections10 inspections
Machine hours500 machine hours
Required:
(a)If Sunshine Ltd were to use a plantwide predetermined overhead rate based on machine hours, compute the total manufacturing cost of the order. Please show all calculations.
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Intermediate Accounting Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
12th Canadian edition
119-49633-5, 1119496497, 1119496330, 978-1119496496
