Required Information Problem 17-3A Applying activity-based costing LO P1, P3, A1

Question

Required Information Problem 17-3A Applying activity-based costing LO P1, P3, A1, A2, C3 The following information applies to the questions displayed below. Craft Pro Machining produces machine tools for the construction industry. The following detsils about overhead costs were taken from its company records. Grinding8 Polishing Product nodification Providing power System calibration $378,080 $155,ee $218,e80 438,880 Additional information on the drivers for its production activities follows. Grinding8 Polishing Product nodification Providing power System calibration 28,82e machine hours 28,888 rachinc hou engineering hours 17,880 direct labor hours 1,82e batches ob 3175 580 MH 32 eng Job 4286 Number of units Machine hours Engineering hours Batche5 5,880 MH 26 eng hours s batchcs hours 15 batchcs Direct labor hours 3,870 DLH Problem 17-3A Parts 2, 3 & 4 2, 3 & 4, Compute the activity overhead rates using ABC. Combine the grinding ond polishing octivities into·single cost pool. Determine overhead costs to “sian to the following iobs using ABC. What is the overnesa cost per unit for Job 3175? What is the overnesd cost per unit for Job 4286? (Round your actlvity rate and average overhead cost per unlt to 2 declmal places. Round "overhead asslgned to the nearest whole dollar.) Job 3175 Job 4286 Overhead Cost Activity Drivers Activity Rata Activity driver Incurred Overhead Activity driver Overhead Grinding& Polishing Machine hours Engineering hrs Direct labor hrs batches Product modification Providing power System calbration

Explanation / Answer

1 ABC system Estimated cost Cost driver Cost per driver Grinding 370000 20000 18.5 Polishing 155000 20000 7.75 Product modification 600000 2100 285.71 Providing power 210000 17000 12.35 System calibration 430000 1000 430.00 1765000 ABC system Cost driver Job 3175 Job 4286 Total Grinding 18.5 9250 92500 101750 Polishing 7.75 3875 38750 42625 Product modification 285.71 9143 7429 16571 Providing power 12.35 5312 47806 53118 System calibration 430.00 2150 6450 8600 Total overheads 29730 192934 222664 Number of units 130 1625 Cost per unit 228.69 118.73

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