Question

Requirements:

1.	Compute the activity cost allocation rates for the year.
2.	Complete the job cost record for Job 557.

Kauler Industries, a small, family-run manufacturer, has adopted an ABC system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: (Click the icon to view activities, total costs, and cost drivers.) During May, Larry and Civilla Kauler machined and assembled Job 557. Larry worked a total of 12 hours on the job, while Civilla worked 7 hours on the job. Larry is paid a $25 per hour wage rate, while Civilla is paid $28 per hour because of her additional experience level. Direct materials requisitioned for Job 557 totaled $1,125. The following additional information was collected on Job 557: The job required 2 machine setups, 4 machine hours, and 3 quality control tests. 1. 2. Compute the activity cost allocation rates for the year. Complete the job cost record for Job 557. 1. Compute the activity cost allocation rates for the year. (Round your answers to the nearest whole dollar.) Data Table First determine the formula to compute the allocation rate for the activity-based cost rate, then calculate the rate for each activity. Activity cost allocation rate Estimated Total Manufacturing Estimated Total Activity A Machine setup .......... Machining Quality control...... Overhead Costs 153,400 858,500 315,000 Usage of Cost Driver 2,950 setups 5,050 machine hours 4,500 tests run A A Print Print Done Done

Answer 1

Activity Rate = Estimated Overhead/Estimated Total Driver
Activity	Cost	Driver	Activity Rate
Machine Setup	153,400	2,950	52	per set up
Machining	858,500	5,050	170	per machine hour
Quality Control	315,000	4,500	70	per test run
Job Cost record
Direct material	1,125
Direct labor	496
Overheads
Machine Setup	104
Machining	680
Quality Control	210
Total cost	2,615

B C D E 1 1 Activity Rate = Estimated Overhead/Estimated Total Driver 2 Activity 3 Machine Setup 4 Machining 5 Quality Control Cost 153400 858500 315000 Driver Activity Rate 2950 =B3/C3 per set up 5050 =B4/C4 per machine hour 4500 =B5/05 per test run 6 1125 =12*25+7*28 7 Job Cost record 8 Direct material 9 Direct labor 10 Overheads 11 Machine Setup 12 Machining 13 Quality Control 14 Total cost =D3*2 =D4*4 =D5*3 =SUM(B8:B13)