Question

Reference el brr fo Standard costing (single plantwide rate): Job 721 Job 722 Direct materials 23,400 $ 2,500 ur Direct labor* 1,500 19,500 375 4,875 Manufacturing overhead 47,775 S 4,375 $ Total cost Direct labor calculated as follows: Total direct labor costs per job Hours per job Direct labor cost per hour X 25 19,500 780 $ Job 721 X 1,500 Job 722 60 X Manufacturing overhead calculated as follows: Manufacturing Predetermined Total direct labor OH allocated OH allocation rate costs per job X 4,875 25% Job 721 $ 19,500 X 375 25% Job 722 $ 1,500 X Print Done II II EA

Answer 1

1. Calculation of total cost for each job using activity based costing :-

Particulars	JOB 721 Amount ($)	JOB 722 (Amount $)
Direct Material	23,400	2,500
Direct Labor	780 hours * 25/hr = 19,500	60 hours * 25/hr = 1,500
Assembly costs	2500 * .25 = 625	300 * .25 = 75
Programming costs	780 hours * 3.5 = 2,730	60 hours * 3.5 = 210
testing costs	8 tests * 125 = 1,000	2 tests * 125 = 250
TOTAL Costs	47,255	4,535

2.

	JOB 721	JOB 722
Cost under standard costing	47,775	4,375
Cost under ABC Costing	47,255	4,535
Difference	520 greater in standard costing because of High manufacturing overheads as compared to apportioned overheads in ABC Costing.	160 less in standard costing because of low overheads as compared to apportioned overheads in ABC Costing.

3.

	JOB 721	JOB 722
Total cost as per ABC Costing	47,255	4,535
Add: Mark Up of 45% of Total cost	47,255 * 45% = 21,264.75	4,535 * 45% = 2,040.75
Sales Price	68,519.75	6,575.75