Question

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Bluefield has decided to use an ABC costing system and has identified the following detailed information about its cost pools and cost drivers: Activity cost pools Materials handling Machine maintenance $90,000 $22,500 Cost drivers Number of material moves Number of machine hours 500 59,800 Required: 1. Calculate Bluefield's activity rate for each cost pool. 2. Determine the amount of overhead assigned to Bluefield's products if each has the following activity demands: Product A Products Number of material moves 200 300 Number of machine hours 22.100 37,700 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate Bluefield's activity rate for each cost pool. (Round your final answer for per material moves to nearest dollar amount and per machine hour to 4 decimal places.) Activity Rate Material Handling Machine Maintenance per Material Move per Machine Hour

Answer 1

Solution :

(1) Activity Rate :

Activity	Activity Rate
Material Handling	$ 180 per Material Move
Machine Maintenance	$ 0.3763 per Machine Hour

(2) Overhead Allocation :

	Total Overhead Assigned
Product A	$ 44,316.23
Product B	$ 68,186.51

Working :

(1) Activity Rate :

Activity	Activity OH (a)	Activity Drivers (b)	Activity Rate (c = a / b)
Material Handling	$ 90,000	500 Material Moves	$ 180 per Move
Machine Maintenance	$ 22,500	59,800 MHs	$ 0.3763 per Machine Hour

(2) Overhead Allocation :

Activity	Activity Rate (a)	Product A		Product B
		Activity Driver (b)	OH Allocated (a * b)	Activity Driver (c)	OH Allocated (a * c)
Material Handling	$ 180 per Move	200	$ 36,000.00	300	$ 54,000.00
Machine Maintenance	$ 0.3763 per Machine Hour	22,100	$ 8,316.23	37,700	$ 14,186.51
OH Assigned				$ 44,316.23	$ 68,186.51

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