Calculating Activity-Based Costing Overhead Rates 1. Calculate the cost per unit

Question

Calculating Activity-Based Costing Overhead Rates

1. Calculate the cost per unit of activity driver for each activity cost category.
Setup $_____
Production scheduling $______
Production engineering $______
Supervision $_______
Machine maintenance $______

2. Calculate the cost of Job 845 using ABC to assign the overhead costs.

$______

3. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)
$_____

A food company had the following activities and costs:

The following additional data were provided for Job 845:

Setup (1,000 setup hours) $118,000 Production scheduling (400 batches) 60,000 Production engineering (60 change orders) 150,000 Supervision (2,000 direct labor hours) 46,000 Machine maintenance (12,000 machine hours) 60,000 Total activity costs $434,000

Explanation / Answer

1. Calculate the cost per unit of activity driver for each activity cost category.

2. Calculate the cost of Job 845 using ABC to assign the overhead costs.

3. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.)

Overhead rate = 434000/12000 = 36.167 per machine hour

Setup (118000/1000) 118 per setup Production scheduling (60000/400) 150 per batch Production engineering (150000/60) 2500 per change order Supervision (46000/2000) 23 per direct labour hour Machine maintenance (60000/12000) 5 per machine hour

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