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 |