Craftmore 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 | $320,000 |
|
|
Polishing |
| $135,000 |
|
Product modification | 600,000 |
|
|
Providing power |
|
| $255,000 |
System calibration | 500,000 |
|
|
Additional information on the drivers for its production activities follows.
Grinding | 13,000 machine hours |
Polishing | 13,000 machine hours |
Product modification | 1,500 engineering hours |
Providing power | 17,000 direct labor hours |
System calibration | 400 batches |
Required
1. Classify each activity as unit level, batch level, product level, or facility level.
2. Compute the activity overhead rates using ABC. Form cost pools as appropriate.
3. Determine overhead costs to assign to the following jobs using ABC.
| Job 3175 | Job 4286 |
Number of units | 200 units | 2,500 units |
Machine hours | 550 MH | 5,500 MH |
Engineering hours | 26 eng hours | 32 eng. hours |
Batches | 30 batches | 90 batches |
Direct labor hours | 500 DLH | 4,375 DLH |
4. What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286?
5. If the company used a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286?
6. Compare the overhead costs per unit computed in requirements 4 and 5 for each job. Which method more accurately assigns overhead costs?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.