Calculating Activity-Based Costing Overhead Rates Assume that manufacturing over

Question

Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs: Setup (1,000 setup hours) $ 146,000 Production scheduling (400 batches) 60,000 Production engineering (60 change orders) 90,000 Supervision (2,000 direct labor hours) 56,000 Machine maintenance (12,000 machine hours) 96,000 Total activity costs $ 448,000 The following additional data were provided for Job 845: Direct material costs $ 8,000 Direct labor cost (5 Milling direct labor hours; 35 Finishing direct labor hours) $ 1,000 Setup hours 5 hours Production scheduling 1 batch Machine hours used (25 Milling machine hours;5 Finishing machine hours) 30 hours Production engineering 3 change orders (a) Calculate the cost per unit of activity driver for each activity cost category. Setup $Answer Production scheduling $Answer Production engineering $Answer Supervision $Answer Machine operating $Answer (b) Calculate the cost of Job 845 using ABC to assign the overhead costs. $Answer (c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.) $Answer (d) To adequately evaluate the price and profitability of Job 845, all of the following additional costs should be considered, except: The cost of operating the corporate jet. All of the above should be considered. Shipping and distribution costs. The impact of nonmanufacturing costs. Cost of providing service to the customer after the sale and delivery of the job.

Explanation / Answer

Cost in $ unit Cost/unit Set up 146000 1000 hrs 146 Prod. Sche 60000 400 batches 150 Prod Eng 90000 60 orders 1500 Supervisn 56000 2000 direct hrs 28 Mac main 96000 12000 mac hrs 8 Total cost 448000 1832 Direct Mat 8000 Direct Lbr. 1000 Total 457000 Cost as per in $ Set up 457.00 Prod. Sche 1142.50 Prod Eng 7616.67 Supervisn 228.50 Mac main 38.08

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