Question

[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. Indirect Materials Other Overhead Indirect Labor $ 330,000 $110,000 Production Activity Grinding Polishing Product modification Providing power System calibration 600,000 $ 240,000 440,000 Additional information on the drivers for its production activities follows. Grinding Polishing Product modification Providing power System calibration 10,000 machine hours 10,000 machine hours 1,900 engineering hours 20,000 direct labor hours 1,500 batches Number of units Machine hours Engineering hours Batches Direct labor hours Job 3175 210 units 350 MH 29 eng hours 10 batches 460 DLH Job 4286 2,625 units 3,500 MH 3e eng. hours 30 batches 4,140 DLH Required: 1. Classify each activity as unit level, batch level, product level, or facility level. Grinding Polishing Product modification Providing power System calibration

Answer 1

Required 1 :

Grinding	Unit Level
Polishing	Unit Level
Product Modification	Product Level
Providing Power	Facility Level
System Calibration	Batch Level

Required 2 :

						Job 3176		Job 4286
Activity	Overhead Cost	Activity Drivers		Activity Rate		Activity Driver Incurred	Overhead Assigned	Activity Driver Incurred	Overhead Assigned
Grinding & Polishing	$ 440,000 {330,000 +110,000}	10,000	Machine Hours	$44 {$440,000/10,000}	Per Machine Hour	350 MH	$ 15,400 {350 MH*$44}	3500 MH	$ 154,000 {3500 MH*$44}
Product Modification	$ 600,000	1,900	Engineering Hours	$315.79 {$600,000/1,900}	Per Engineering Hour	29 Eng Hours	$ 9,158 {29 Eng Hours*$315.79}	30 Eng Hours	$ 9,474 {30 Eng Hours*$315.79}
Providing Power	$ 240,000	20,000	Direct Labor Hours	$12 {$240,000/20,000}	Per Direct Labor Hour	460 DLH	$ 5,520 {460 DLH*$12}	4,140 DLH	$ 49,680 {4,140 DLH*$12}
System Calibration	$ 440,000	1,500	Batches	$293.33 {$440,000/1,500}	Per Batch	10 Batches	$ 2,933 {10 Batches*$293.33}	30 Batches	$ 8,800 {30 Batches*$293.33}
						Total Overhead Cost	$ 33,011		$ 221,954
						Number of units in Job	210 Units		2,625 Units
						Average Overhead Cost per Unit	$157.20 {$33,011/210 Units }		$84.55 {$221,954/2,625 Units }

Required 3 :

Overhead costs	$ 1,720,000	$ 86	Per Direct Labor Hour
Direct Labor Hours	20,000 DLH
Product	DL Hours	Plantwide OH Rate	Total Overhead Cost	Units Produced	OH Cost Per Unit
Job 3176	460 DLH	$ 86	$39,560 {460 DLH*$86}	210 Units	$188.38 {$39,560/210 Units}
Job 4286	4,140 DLH	$ 86	$356,040 {4140 DLH*$86}	2,625 Units	$135.63 {$356,040/2,625 Units}