Question

The job costing system at Shelby's Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs; Job 215, an order of 16 intricate personalized frames, and Job 325, an order of 4 standard personalized frames. The controller wants you to compare overhead alocated under the current simple job-costing system and a newly designed activity-based job-costing system. Total budgeted costs in each indirect cost pool and the budgeted quantity of activity driver are as follows. Click the icon to view the cost and driver data. (Click the icon to view the job data) Read the requirements Requirement 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours Begin by calculating the overhead rate under the simple costing system. First select the formula, then enter the applicable amounts and calculate the rate. (Round your answer to the nearest cent. Abbreviations used: bgt budgeted, mach - machine, mal-material, purch purchase, aty. quantity) Budgeted overhead rate Simple costing system Now calculate the total overhead allocated to each job under a simple costing system. (Round your answer to the nearest cont.) Job 215 Job 325 Simple costing system Indirect cost allocated Requirement 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers Choose from any list or enter any number in the input fields and then continue to the next question

Answer 1

Answer is given below

Machine hour rate Total Overheads Total Machine hours $243,000 $10,000 $24.30 Per Machine hour Simple Costing system Job 215 Job 325 40 Machine hours used Machine hour rate Indirect cost allocated $24.30 $972 $24.30 $1,458 Calculation of Activity rates Activity Total Activities Activity rate Total Overheads $27,000 $61,200 $140,000 $7,800 $7,000 $243,000 1,800 5,100 Purchasing Material handling Machine maintenance Inspection Packaging Total budgeted indirect costs 10,000 $15.00 per purchase order $12.00 Per material move $14.00 Per machine hour $6.00 Per inspection $2.00 Per unit produced 1,300 3,500 ABC Costing System Overhead cost allocated Purchasing Material handling Machine maintenance Inspection Packaging Total costs Job 215 $300.00 $192.00 $560.00 $48.00 $32.00 $1,132 Job 325 $120.00 $60.00 $840.00 $30.00 $8.00 $1,058 Option B and D Working notes: Allocation of Overheads - ABC method Cost activity rate Activities used Allocated Cost Activity Job 215 Job 325 Job 215 $300 $192 Purchasing Material handling Mixing Chilling Packaging Total ABC allocated indirect cost $15.00 $12.00 $14.00 $6.00 $2.00 Job 325 $120 $60 $840 $30 $560 $48 $32 $1,132 $1,058 A