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 Squared Edge Total Direct materials $ 9,300 $ 21,700 $ 31,000 Direct labor 6,000 11,800 17,800 Overhead (300% of direct labor cost) 18,000 35,400 53,400 Total cost $ 33,300 $ 68,900 $ 102,200 Quantity produced 10,300 ft. 14,200 ft. Average cost per ft. (rounded) $ 3.23 $ 4.85 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $53,400 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) Cost Supervision $ 2,136 Depreciation of machinery 28,520 Assembly line preparation 22,744 Total overhead $ 53,400 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.) Usage Overhead Cost Category (Activity Cost Pool) Driver Rounded Edge Squared Edge Total Supervision Direct labor cost ($) $ 6,000 $ 11,800 $ 17,800 Depreciation of machinery Machine hours 300 hours 600 hours 900 hours Assembly line preparation Setups (number) 30 times 94 times 124 times

Answer 1

particulars			round edge		squared edge		total
direct material cost			9300		21700		31000
direct labor cost			6000		11800		17800
overheads
(+)	supervision		720		1416		2136
			(6000*0.12)		(11800*0.12)
(+)	depreciation		9506.667		19013.33
			(300*31.6888)		(600*31.6888)
(+)	assembly		5502.581		17241.42
			(30*183.41)		(94*183.41)
	total cost		31029.25		71170.75		102200
	total qty'		10300		14200
	cost per unit		3.012548		5.012025
working notes
			cost	activity driver			Rate/unit
	supervision		2136	labor cost		17800	0.12
	depreciation		28520	machine hrs		900	31.68889
	assembly		22744	setups		124	183.4194