Question

Required information (The following information applies to the questions displayed below.) Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Other Overhead Production Activity Grinding Polishing Product modification Providing power System calibration Indirect LaborIndirect Materials $400,000 $120,000 500,000 560,000 $215,000 Additional information on the drivers for its production activities follows. Grinding Polishing Product modification Providing power System calibration 11,000 machine hours 11,000 machine hours 1,600 engineering hours 15,000 direct labor hours 400 batches Job 3175 130 units 250 MH Job 4286 1,625 units 2,500 MH Number of units Machine hours Engineering hours Batches Direct labor hours 34 eng. 22 eng. hours 25 batches 450 DLH 24 hours 75 batches 4,050 DLH 34. Compute the activity overhead rates using ABC. Combine the grinding and polishing activities into a single cost pool mine overhead costs to assign to the following jobs using ABC. What is the overhead cost per unit for Job 3175? What is the head cost per unit for Job 4286? (Round your activity rate and average overhead cost per unit to 2 decimal places. Round -hear accioned to the nearest whole dollar)

Answer 1

Ans.						Job 3175		Job 4286
	Activity	Overhead cost	Activity drivers	Activiy rate		Activity driver incurred	Overhead assigned	Activity driver incurred	Overhead assigned
		( A)	(B)	©		(D)	(E = C*D)	(F)	(G = C*F)
	Grinding & Polishing	$520,000	11000	$47.27	per machine hour	250	$11,818	2500	$118,182
	Product modification	$500,000	1,600	$312.50	per engineering hour	34	$10,625	22	$6,875
	Providing power	$215,000	15000	$14.33	per direct labor hour	450	$6,450	4050	$58,050
	System calibration	$560,000	400	$1,400.00	per batch	25	$35,000	75	$105,000
					Total Overhead Cost		$63,893		$288,107
		Job 3175	Job 4286
	Total overhead cost	$63,893	$288,107
	(/)Number of units	130	1,625
	Overhead cost per unit	$491.48	$177.30
	*Grinding and Polishing have the same activities so these are calcuted combined.
	*Activity rate = Overhead cost / Activity drivers
	*Overhead cost assigned = Acitivity driver incurrred * Activity rate
	*Overhead cost per unit = Total overhead cost / Number of units