The job costing system at Sophie's Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is
The job costing system at Sophie's Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs; Job 215, an order of 16 intricate personalized frames, and Job 325, an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple jobcosting system and a newly designed activitybased jobcosting system. Total budgeted costs in each indirect cost pool and the budgeted quantity of activity driver are as follows. @ (Click the icon to view the cost and driver data.) 0 (Click the icon to view the job data.) Read the muirements. Requirement 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machinehours. Begin by calculating the overhead rate under the simple costing system. First select the formula, then enter the applicable amounts and calculate the rate. (Round your answer to the nearest cent. Abbreviations used: bgt. = budgeted, mach. = machine, mat. = material, purch. = purchase, qty. = quantity.) Budgeted overhead rate Data table Purchasing Material handling Machine maintenance Product inspection Packaging Total Budgeted Overhead 36,000 55,200 11 0,000 1 3,600 1 7,000 231,800 Budgeted Quantity Activity Driver of Activity Driver Purchased orders processed 2,000 Material moves 4,600 Machine-hours 10,000 Inspections 1,700 Units produced 3,400 More info Information related to Job 215 and Job 325 follows. Job 215 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 325. Job 215 Job 325 Number of purchase orders 21 6 Number of material moves 16 2 Machine-hours 20 80 Number of inspections 8 6 Units produced 16 6 \\l Requirements 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours. 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers. 3. Explain why Sophie's Custom Framing might favor the ABC jobcosting system over the simple job-costing system, especially in its bidding process
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