Question

The job costing system at Suzy's Custom Framing has ve indirect contpools (purchasing, material handing machine maintenance product inspection, and packaging). The company is in the process of bidding on two jobs Job 215. an order of 10 inche personalized frames, and Job 325an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job-costing wystem 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 loon to view the cost and driver data.) Click the icon to view the job data) 1 Data Table 1 More Info Budgeted Quantity of Activity Driver Information related to Job 215 and Job 325 follows Job 215 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 325 Job 215 Job 325 Budgeted Overhead 19,500 46.000 120.000 6,600 12,800 Purchasing Material handing Machine maintenance Product inspection Activity Driver Purchase orders processed Material moves Machine hours Inspections 4,600 Number of purchase orders Number of material moves Machine hours Number of inspections Units produced Package Units produced 3.200 204,900 Print Done Print Done

Answer 1

Answer Calculation Requirement - of overhead rate under simple Costing system overhead is anocated based on machine hours a Budgeted Ouesheed rate ai Cost Indirect overhead machine hours $204900 10000 Has $20.49 per hour Under simple Costing system: Allocation of overhead to : Job 215 machine Hours used in Job & 20 Hours Allocation of indirect Cost - Budgeted overhead date x machine = $20.49 per hour x 20 Hours = $ 409,8 Hours Job 325 machine Hours used in Job = 80 Hours Allocation of indirect cost - & 20.49 per hour x 80 Hours = & 1639.2 simple Casting system Job 215 Job 325 indirect Cost Allocated & 409.8 $ 1639.2

under Activity based costing system Calculation of overhead rate Purchasing Purchasing overhead Purchased order Processed 19soo 2 15oo 2 13 Mat. handling material handling over head material 46000 4600 moves - 10 Mach, mainte mochine maintenance machine hours oud head 120000 10000 Inspection Product Inspection Inspections oueshead 6600 - 2 6 1100 Packaging Packaging outs head 12800 24 units Produced 3200 Allocation of total overhead Job 215 cost Purchasing Purchasing overhead date & Purchased order Processed 13 X 21 - 273 mat. handling mat. handling over head crate y material moves 2 10 X 16 = 160 mach, mainta Machine Maintenance overhead rat x machine hours 12 x 20 - 240 Inspection Product Inspection 6 x 9 a Inspections overhead rolex su = Packaging lackaging overhead rate & units Produced = 4 x 16 & 64

Allocation Cost of Job total overhead 325 Purchasing - 13x a = 117 mat, handling - lox 6 & 60 Machi maint - 12 x 80 = 960 Inspection – 6x4 = 24 Packaging 4 x 6 = 24 ABC Costing system overhead Costs allocated: Job 2 15 Job 325 Purchasing 273 117 mat. handling 160 60 mach, mainte 2५० 960 Inspection 54 24 64 24 Packaging Total Cost 791 1185