In regards to calculating C. of this question. How do you determine $460,000 as
ID: 2417788 • Letter: I
Question
In regards to calculating C. of this question. How do you determine $460,000 as the total activity cost? the sum of $146k, $60k, $90k, $56k and $96k is $448,000 and I'm a little confused on how $460,00 was determined.
Calculating Activity-Based Costing Overhead Rates
Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs:
The following additional data were provided for Job 845:
3 change orders
(a) Calculate the cost per unit of activity driver for each activity cost category.
(b) Calculate the cost of Job 845 using ABC to assign the overhead costs.
(c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)
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 $ 448,000Explanation / Answer
a) Cost per unit of activity driver for each activity cost category -
Setup = $146000 / 1000 = $146
Production scheduling = $60000 / 400 = $150
Production engineering = $90000 / 60 = $1500
Supervision = $56000 / 2000 = $28
Machine maintenance = $96000 / 12000 = $8
b) Cost of Job 845 using ABC -
Particulars Amt
Direct Material cost $8000
Direct Labour cost $1000
Setup ($146 * 5 hrs) $730
Production scheduling ($150 * 1 batch) $150
Machine maintenance ($8 * 30 hrs) $240
Production engineering ($1500 * 3 change orders) $4500
Total cost $14620
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