Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs:
Setup (1,000 setup hours) |
$152,000 |
Production scheduling (400 batches) |
68,000 |
Production engineering (60 change orders) |
120,000 |
Supervision (2,000 direct labor hours) |
56,000 |
Machine maintenance (12,000 machine hours) |
84,000 |
Total activity costs |
$480,000 |
The following additional data were provided for Job 845
Direct materials costs |
$9,000 |
Direct labor cost (5 Milling direct labor hours; |
|
35 Finishing direct labor hours) |
$3,000 |
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 cost |
Answer
|
Production engineering cost |
Answer
|
Supervision cost |
Answer |
Machine operating cost |
Answer
|
b. Calculate the cost of Job 845 using ABC to assign the overhead costs.
Job 845 |
|---|
Direct materials cost |
Answer |
Direct labor cost |
Answer |
Manufacturing overhead costs: |
|
|
Setup costs |
Answer |
Production scheduling |
Answer |
Production engineering |
Answer |
Supervision |
Answer |
Machine operations |
Answer |
Total cost |
Answer |
c. Calculate the cost of Job 845 using a company-wide overhead rate based on machine hours.
First, compute company-wide overhead rate using machine hours (Note: Information needed for this computation can be found in the table below in part d.)
Round rate to two decimal places.
$Answer per machine hour
Next, use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
Job 845 |
|---|
Direct materials cost |
Answer |
Direct labor cost |
Answer |
Manufacturing overhead cost: |
Answer |
Total cost |
Answer |
d. Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling Department and a direct labor hour overhead rate for the Finishing Department.
Milling Department manufacturing overhead |
$352,000 |
Finishing Department manufacturing overhead |
$128,000 |
Machine hours used |
|
Milling Department |
10,000 hours |
Finishing Department |
2,000 hours |
Labor hours used |
|
Milling Department |
1,000 hours |
Finishing Department |
1,000 hours |
Round rates to two decimal places, if needed.
$Answer per Milling Dept. machine hour
$Answer per Finishing Dept. direct labor hour
Use rounded overhead rates calculated above for calculations below. Round cost answers to the nearest whole number, when needed.
Job 845 |
|---|
Direct materials cost |
Answer |
Direct labor cost |
Answer |
Manufacturing overhead costs: |
|
Milling Department |
Answer |
Finishing Department |
Answer |
Total cost |
Answer |