Jardon painting paints the interiors and exteriors of homes and commercial build
ID: 2503641 • Letter: J
Question
Jardon painting paints the interiors and exteriors of homes and commercial buildings. The company uses and activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system.
Activity cost pool
Activity measure
Annual activity
Painting overhead
Square meters
30,000 square meters
Job support
Jobs
1,100 jobs
Other
None
Not applicable
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The company has already finished the first stage of the allocating process in which costs were allocated to the activity cost centers. The results are listed below:
Painting
Job support
Other
total
Painting overhead
$110,000
$50,000
$40,000
$200,000
Office expense
40,000
60,000
35,000
135,000
Total
150,000
$110,000
$75,000
$335,000
Required:
Job
Painting
Support
Total
Activity cost pool
Activity measure
Annual activity
Painting overhead
Square meters
30,000 square meters
Job support
Jobs
1,100 jobs
Other
None
Not applicable
Explanation / Answer
Answer:
Job
Painting
Support
Total
$ 5
$ 100
Using activity-based costing
Activity Cost Driver Estimated Overhead Expected Use of Cost Driver Activity Based Overhead Rate
Painting overhead Square meters $ 150,000 30000 $ 5.00
Job support Jobs $ 110,000 1100 $ 100.00
Determine the amount of overhead cost that would be assigned to product using activity-based costing. Total Overhead Cost of ONE Job
Activity Activity Based Overhead Rate Estimated Overhead
Painting overhead $5.00 $2,000
Job support $100.00 $100
Total Overhead Cost
$2,100
Determine the product margins for product using activity-based costing.
Sales (total)........... $ 3,600.00
Direct Materials (total) $ 1,000.00
Direct Labor (total) $ 1,190.00
Total Overhead Cost $ 2,100.00
Product Margin $ (690.00)
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