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. Rounded Edge $9.780 Squared Edge $21.50 Total $ 31,200 17.20 Direct materials Direct labor Overhead (30% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) $33,78 559. $122. Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $53.700 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 Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead 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.) Overhead Cost Category Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct Labor cost (5) Machine hours Setups (number) 56. hours O hours 94 times 100 hours 125 times Required: 1. Assign these twee overhead cost pool teach of the products Activity Overhead Cost Activity Drivers ARC Supervision Assembly in preparation Rounded edge Overhead assigned Dery

Answer 1

Answer

• Requirements

Activity	Overhead cost	Activity driver		Activity rate
Supervision	$2,148	$17,900	Direct labor cost	12%	of direct labor cost
Depreciation of machinery	$28,680	900	Machine hour	$31.87	per machine hours
Assembly line preparation	$22,872	125	Setups	$182.98	per setup
ROUNDED EDGE	Activity rate		Activity driver incurred	Overhead assigned
Supervision	12%	of direct labor cost	$6,000	$720
Depreciation of machinery	$31.87	per machine hours	300	$9,561
Assembly line preparation	$182.98	per setup	31	$5,672
				$15,953
SQUARED EDGE	Activity rate		Activity driver incurred	Overhead assigned
Supervision	12%	of direct labor cost	$11,900	$1,428
Depreciation of machinery	$31.87	per machine hours	600	$19,122
Assembly line preparation	$182.98	per setup	94	$17,200
				$37,750

	ROUNDED EDGE	SQUARED EDGE
Direct materials	$9,700	$21,500
Direct labor	$6,000	$11,900
Overhead	$15,953	$37,750
Total cost	$31,653	$71,150
Quantity produced (feet)	10600	14100
Cost per foot	$2.99	$5.05