Question

cach. 15 points total Problem-ABC points.ench, 15 i ng its overhead costs for the Tadlock Corporation has provided the follo coming year: & dar Wages and salaries Depreciation Rent Total $110.000 120.000 160.000 5720.000 The company has an activity-based costine 8 system with the for Gallowing three activity cost pools and estimated activity for the coming year Total Estimated Acu Activity Cost Pools Assembly Order Processing Other osal Estimated Activity 40,000 labor hours Not applicable 600 orders The Other activity cost pool does not have a no have a measure of activity, it is used to accumulate ests of idle capacity and organization-sustainine costs The distribution of resource consumption across activity cost pools is given below: Activity Cost Pools Assembly Order Processing Other Total Wages and salaries 40% 35% 25% 100% Depreciation 20% 100% Rent 10% 65% 100% 30% 50% 25% At the end of the year, Tadlock found the following actual activity for the year: Activity Cost Pools Assembly Order Processing Other 1. What is the OH rate for Assembly? Work: Total Actual Activity 40,130 labor hours 595 orders Not applicable Answer (1): 720,000 $18 40,000 2. How much total overhead will be applied to Wil' for Assembly? $27340 Work: Answer (2): _'IL T U * 18 × 40, 130= 722, 340

Answer 1

Answer to Problem 3:

Part 1.

Allocation of Activity Cost pool to Assembly:

Wages and Salaries ($440,000 * 40%)	$176,000
Depreciation ($120,000 * 20%)	$24,000
Rent ($160,000 * 10%)	$16,000
Total Activity Cost	$216,000
Expected Activity	40,000 Labor Hours
Overhead Rate	$5.40 per LH

Part 2.

Overhead applied to WIP for Assembly = $5.40 * 40,130

Overhead applied to WIP for Assembly = $216,702

Part 3.

Allocation of Activity Cost pool to Order Processing:

Wages and Salaries ($440,000 * 35%)	$154,000
Depreciation ($120,000 * 30%)	$36,000
Rent ($160,000 * 65%)	$104,000
Total Activity Cost	$294,000
Expected Activity	600 Orders
Overhead Rate	$490 per order

Part 4.

Overhead applied to WIP for Order Processing = $490 * 595

Overhead applied to WIP for Order Processing = $291,550

Part 5.

Allocation of Activity Cost pool to Others:

Wages and Salaries ($440,000 * 25%)	$110,000
Depreciation ($120,000 * 50%)	$60,000
Rent ($160,000 * 25%)	$40,000
Total Overhead Allocated	$210,000