Question

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.

Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines.

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (3008 of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,600 6, 100 18,300 $34,000 10,700 ft. $ 3.18 Squared Edge Total $21,800 $ 31,400 11,900 18,000 35,700 54,000 $69,400 $103, 400 14,100 ft. $ 4.92 Glassworks's controller wishes to apply activity based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Cout Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead $ 2,160 28,840 23,000 $ 54,000 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)

Answer 1

1. Assign these thoce overhead Cost- pools to each of the two poodests! Using ABC- Activity Overheadcool Achty Achuly of Davers Rate y supeoupsion $ 2,160 +18,000 Oract lotoo 20% of doet Depucalion of machte laboo cos 28,840 I 1,000 machine hours $28.84 ! peo machine har Assembly me pooporralfon 23,000 125 setups $184.00 peo set up Rounded edge adivity date ACHU Pry Qeshead diver cue assigned Supeduspon 19-007. of direct $ 6,100 $ 732 taboCoSH Depreciation of $ 28.84 per machine 300 machhery 8,652 huo Assembly line perelion $184.00 seo setup 5,704 Tot oveohedd cost $ 15,088 Squand edge Achlity rate! Ackning Ooohead doped Components focused | assigned Supeolispor 12.00). Of droect Taboo cost $ 11,900 $ 1428 Depreciation or machmeay 28.84 peo machine 700 20,188 hacia Assembly me preporoolon $ 121.00 peo seoop Total dves head cost $38,912 2. Determpre avercege cost peo poor for each of the two poodheachs using ABC Rounded Squard edgero coge ($) Total direct mateokel 9.600 21,800 "TOtell derech labor cost 6,100 11,900 Toto overhead Cos! - CABC) 15088 38,912 totoo manfactuofn (9600+6100+ (50%) 30,788 Cost C21800+1200+3898) 72,62 10,700 14,100 Creen) Average cost | ( 30,789, 72612 Foot 10700 14,100 S-IS 94 17,296 Cost Toto panteochon 2.88