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The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers. Activity Cost Pool Budgeted Overhead Cost Cost Driver

The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.

Activity Cost Pool

Budgeted Overhead Cost

Cost Driver

Budgeted Level for Cost Driver

Pool Rate

Machine setups

$

312,500

Number of setups

125

$

2,500

per setup

Material handling

50,000

Weight of raw material

25,000

lb.

$

2

per pound

Hazardous waste control

25,000

Weight of hazardous chemicals used

5,000

lb.

$

5

per pound

Quality control

75,000

Number of inspections

1,000

$

75

per inspection

Other overhead costs

250,000

Machine hours

25,000

$

10

per machine hour

Total

$

712,500

An order for 1,000 boxes of medical-testing agent has the following production requirements.

Machine setups

5

setups

Raw material

10,000

pounds

Hazardous materials

2,000

pounds

Inspections

10

inspections

Machine hours

600

machine hours

Required: 1. Compute the total overhead that should be assigned to the medical-testing agent order. 2. What is the overhead cost per box of testing agent? 3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour. 4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order? a. In total. b. Per box of testing agent.

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