Question

Chapter 6 Activity Based Costing Poldberg Co. uses activity based costing for all of its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system Overhead costs: Wages & Salaries Factory Supplies $806,000 488.000 $1.294,000 Total Distribution of resource consumption Activity Cost Pools Wages and salaries Factory Supplies Clean Up 22% 48% Inspection 60% 20% Other 18% 32% Total 100% 100% The amount of activity for the year is as follows: Activity Cost Pool Activity Clean-Up 1,000 Batches Inspection 400 Inspections How much OVERHEAD cost would be allocated to a "Customer A," who initiated 125 batches and 55 inspections in a year? (Please complete the template below.)

Answer 1

Answer :

Activity cost pool	Clean up	Inspection	Others	Total
Wages and salaries	177320	483600	145080	806000
Factory supplies	234240	97600	156160	488000
Total	411,560	581,200	301,240	1,294,000

Activity cost pool	Total cost	Total activity	Rate
Clean up	411,560	1000	411.56
Inspection	581,200	400	1453.00

	Rate	Activity	Overhead cost assigned to customer A
Clean up	411.56	125	51,445
Inspection	1453	55	79,915
Total			$131,360

(b) Customer Margin Report :

Sales 580,000

Direct material 230,000

Direct labor 150,000

Selling cost 80,000

OH Cost

Set up cost 51,445

Inspection 79,915

Contribution margin ($11,360)