The following are the four activities and the total cost pools of each which were gathered after a series of interviews and observations made by the team set up by the accounting department to change the traditional way of determining applied factory overhead for Printrite Inc.: ACTIVITIES COST POOLS COST DRIVER OH RATE Machine Setups $ 25,000 Design Changes 15,000 Machining Support 80,000 Assembly Support 50,000 The following cost drivers were chosen as most appropriate for the above activities: Direct labor cost $75,000 Number of setups 200 Number of machine hours 2,000 Number of design hours 500 REQUIRED: Match the activities to the cost drivers and compute the overhead rate per activity. Job 401 used up $500 direct materials, $1,000 direct labor cost, 200 direct labor hours, 100 machine hours, two set ups and three design changes. Give the total cost of this job if traditionally overhead rate is based on the normal capacity of the firm where total overhead amounted to $250,000 and total direct labor cost estimated at $125,000 and $25,000 indirect labor cost. Give the total cost of this job if the firm will shift to activity based costing.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 3E: The following data appeared in the accounting records of Craig Manufacturing Inc., which uses the...

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The following are the four activities and the total cost pools of each which were gathered after a series of interviews and observations made by the team set up by the accounting department to change the traditional way of determining applied factory overhead for Printrite Inc.:

ACTIVITIES	COST POOLS	COST DRIVER	OH RATE
Machine Setups	$ 25,000
Design Changes	15,000
Machining Support	80,000
Assembly Support	50,000

The following cost drivers were chosen as most appropriate for the above activities:

Direct labor cost $75,000

Number of setups 200

Number of machine hours 2,000

Number of design hours 500

REQUIRED:

Match the activities to the cost drivers and compute the overhead rate per activity.
Job 401 used up $500 direct materials, $1,000 direct labor cost, 200 direct labor hours, 100 machine hours, two set ups and three design changes.
Give the total cost of this job if traditionally overhead rate is based on the normal capacity of the firm where total overhead amounted to $250,000 and total direct labor cost estimated at $125,000 and $25,000 indirect labor cost.
Give the total cost of this job if the firm will shift to activity based costing.

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