Question
Wonder Moon Manufacturing Inc. (the company) is a lawn mower manufacturer, and has three different categories of overhead. The overhead costs for each of the
Wonder Moon Manufacturing Inc. ("the company") is a lawn mower manufacturer, and has three different categories of overhead. The overhead costs for each of the categories for the next year are as follows:
Costs | Cost Driver | Expected Activity | |
Maintenance | $400,000 | Machine hours | 40,000 |
Inspection | $240,000 | Inspections | 6,000 |
Materials handling | $140,000 | Material moves | 7,000 |
The company applies overhead using a predetermined overhead rate based upon a budgeted direct labour hours of 60,000.
The company has been asked to submit a bid on a proposed job. In order to submit this bid, the company needs to calculate the total cost of performing this job. Financial details for the proposed job are as follows:
Number of material moves | 50 |
Number of inspections | 130 |
Number of machine hours | 4,100 |
Number of direct labour hours | 11,500 |
Direct materials | $40,000 |
Direct labour | $44,000 |
1. If the company used activity-based costing, calculate the total overhead cost that would be assigned for material handling to the job
2. If the company used activity-based costing, calculate the total overhead cost that would be assigned for maintenance to the job
3. If the company used activity-based costing, calculate the total overhead cost that would be assigned for inspections to the job
4. If the company used activity-based costing, calculate the total of material cost + direct labour cost that would be assigned to the job
5. If the company used activity-based costing, calculate the total cost that would be assigned to the job
6. If the company allocated overhead to the job using a plantwide overhead rate, calculate the total overhead cost assigned to the job
7. If the company allocated overhead to the job using a plantwide overhead rate, calculate the total cost assigned to the job
8. It would not be appropriate to adopt an ABC policy if which of the following were true:
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