Cardiff and Delp is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period. Activities Costs 1,600 contact hours 2,600 design hours 46,000 square feet $176,000 159,900 39, 100 Design department client consultation Drawings Modeling Project management department Supervision Billings Collections 800 days 6 jobs 6 jobs $136,000 10,000 6,260 Required: 1. & 2. Using ABC, compute the firm's activity overhead rates. Form activity cost pools where appropriate. Assign costs to a 9,000- square-foot job that requires 550 contact hours, 356 design hours, and 190 days to complete. (Round activity rate answers to 2 decimal places.) Activity Expected Costs Expected Activity Driver Activity Rate Activity Driver Incurred Overhead Assigned Client consultation Drawings Modeling Supervision Billings/Collection Total overhead cost Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,500 6,100 18,300 $ 33,900 10,500 ft. $ 3.23 Squared Edge Total $ 21,500 $ 31,000 12,000 18,100 36, 000 5 4,300 $ 69,500 $103,400 14,000 ft. $ 4.96 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,300 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead Cost $ 2,172 29,000 23, 128 $ 54,300 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,100 400 hours 31 times Squared Edge $12,000 700 hours 93 times $18, 100 1,100 hours 124 times Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Cost Activity Drivers Activity Rate Activity Supervision Depreciation of machinery Assembly line preparation Direct labor cost Machine hours Setups Rounded edge Activity rate Activity driver incurred Overhead assigned Supervision Depreciation of machinery Assembly line preparation Squared edge Activity rate Activity driver incurred Overhead assigned Components Supervision Depreciation of machinery Assembly line preparation 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge
