Question

Craft Pro Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.

Production Activity	Indirect Labor				Indirect Materials				Other Overhead
Grinding	$	370,000
Polishing					$	110,000
Product modification		600,000
Providing power									$	265,000
System calibration		410,000

Additional information on the drivers for its production activities follows.

Grinding	11,000	machine hours
Polishing	11,000	machine hours
Product modification	2,100	engineering hours
Providing power	21,000	direct labor hours
System calibration	1,000	batches

	Job 3175		Job 4286
Number of units	140	units	1,750	units
Machine hours	250	MH	2,500	MH
Engineering hours	26	eng. hours	36	eng. hours
Batches	25	batches	75	batches
Direct labor hours	450	DLH	4,050	DLH

Problem 04-3A Parts 2, 3 & 4

Required:
2, 3 & 4. Compute the activity overhead rates using ABC. Combine the grinding and polishing activities into a single cost pool. Determine overhead costs to assign to the above jobs using ABC. What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286? (Round your activity rate and average overhead cost per unit to 2 decimal places. Round "overhead assigned" to the nearest whole dollar.)

Answer 1

# Stasement showing compretcellons of eve activity overhead lates. using "ABC. poden activity . Coste di avere COST 6 Drivees for production 0 Albit sades. solidy oudsheet ca) (0) (d) ce=c7) esinding Machine hours CMH) 3,70,000. 11,000 kn!H. 33.64 pee M.H. polishing 10 poe Mih. 1,10,000 16,000 MH machine houes (MIH) Product modification Englweeling 285.71 pelEH. G00,000 2100 Eitt hours (EH) 12.6218 DiL'H. providing power Dilect tabos 2,65,000 21000 DLH houls. (D.LH) 1000 badches 410 per batches. 4110,000 system calibration Barches. + combcrining the geinding and poughing acdpuities in to a spegi single. Cost pool - acolo my ouerkead Rudes for oneinding + Activity overhead rade Gol polishing ) combined cost pool = 33064 • Pes machine hour + 10 pee machine hous. combined cost pool 43.64 per machine hous. .

* Statement showing Determination of overhead cost do Bof assigns to the jobs by using ABC. Ditters bos Acility production Actioity oveghecido Job 4286 Job 3175 bob Job 3175 4286 rantes (d) (e = bxd) cu) neinding + palswing (f='ex 1,09,100 (2500 X43.64). 250 2500 MH machine 43.64 Per M.H 10910 C250X 43,64) houe. . 36 26 285.71 og Product modification enginos/enginos 7428.46 enginos. (26x285-71) 10285.56 (36x 285071) oper 5111 (4050X 12.62) 4050 450 DLI 12'62 DLI Providing .5679 (450 X 12062) OLH powed ° 410 pes batches B0750 (75*410) 10250 (25x410) 75 S system callbea-/as dlon. Badches Batches 2,01, 246.56. TOTAL 84,267.46. overhead cost assiqued to. 34,268 2,01,247 * statement shocolny compusetion or overhead toso pes més jove Jobs. Job 3175 Joy 4286 34268 2,01,247 1750 units 140 units Deedulares. a) overhead cost dossigued to о 3 6 wamber of units head c) over het cost per unit (a/b) 244.77 Del unit + Hola 115 pee unit. (34268 / 140 wins) (2,01,247./4750 uppt)