Question

Craft Pro Machining produces machine tools for the construction Industry. The following details about overhead costs were taken from its company records. Indirect Materials Indirect Labor $ 410,000 Other Overhead $155.000 Production Activity Grinding Polishing Product modification Providing power System calibration 650,000 $225,000 440,000 Additional Information on the drivers for its production activities follows. 1800 engineering Grinding 10,000 machine hours Polishing 10,000 machine hours Product 0 modification hours Providing power direct labor 16,000 hours System calibration 300 batches Number of units Machine hours Engineering hours Batches Direct labor hours Job 3175 150 units 350 MH 32 eng hours 20 batches 510 DLH Job 4286 1.875 units 3.500 MH 32 eng hours 60 batches 4.590 LH

Answer 1

1.

Grinding	Unit level
Polishing	Unit level
Product modification	Product level
Providing power	Facility level
System calibration	Batch level

2,3&4.

						Job 3175		Job 4286
Activity	Overhead cost	Activity drivers		Activity rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
Grinding & Polishing	$565,000	20,000	Machine hours	$28.25	Per machine hour	350	$9,888	3500	$98,875
Product modification	650,000	1,800	Engineering hours	361.11	Per engineering hour	32	11,556	32	11,556
Providing power	225,000	16,000	Direct labor hours	14.06	Per direct labor hour	510	7,171	4,590	64,535
System calibration	440,000	300	Batches	1,466.67	Per batch	20	29,333	60	88,000
							$57,948		$262,966
Total units							150		1,875
Overhead cost per unit							$386.32		$140.25

5.

Estimated total overhead cost	$1,880,000	$117.5	Per direct labor hour
Direct labor hours	16,000
Product	DL hours	Plantwide overhead rate	Total overhead cost	Units produced	OH cost per unit
Job 3175	510	$117.5	$59,925	150	$399.5
Job 4286	4,590	$117.5	539,325	1,875	$287.64