[The following information applies to the questions displayed below.] Craft Pro

Question

[The following information applies to the questions displayed below.] Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Production Activity Grinding Polishing Product modification Providing power System calibration Indirect Labor Indirect Materials Other Overhead $ 390,000 450,000 480,000 $ 190,000 $ 200,000 Additional information on the drivers for its production activities follows. Grinding Polishing Product modification Providing power System calibration 11,000 machine hours 11,000 machine hours 1,300 engineering hours 19,000 direct labor hours 700 batches Job 4286 2,250 units 3,000 MH Job 3175 180 Number of units units 300 MH Machine hours Engineering hours Batches 34 eng.hours 10 batches 28 eng.hours 30 batches 4,500 Direct labor hours 500 DLH DLH

Explanation / Answer

Grinding

Overhead costs

1

Grinding

Unit level Polishing Unit level Product modification Product level Providing power Facility level System calibration Batch level



2.3&4 Job 3175 Job 4286 Activity Overhead Cost Activity Drivers Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Grinding & polishing $580,000             
11,000 Machine hours $             52.73 per machine hour 300 $15,819 3,000 $ 158,190 Product modification 450,000 1,300 Engineering hrs. $           346.15 per engineering hour 34       11,769 28         9,692 Providing power 200,000 19,000 Direct labor hrs. $             10.53 per direct labor hour 500         5,265 4500       47,385 System calibration 480,000 700 batches $           685.71 per batch 10         6,857 30       20,571 Total overhead cost $39,710 $ 235,839 Number of units in job 180 2,250 Average overhead cost per unit $220.61
$104.82




5

Overhead costs

$1,710,000 90.00 per direct labor hour Direct labor hours 19,000 Product DL
hours Plantwide
OH rate Total
Overhead Cost Units
Produced OH
Cost per unit Job 3175 500 90 45000 180 $250.00 Job 4286 4,500 90 405000 2250 $180.00

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