Focus Fabrication Co. uses ABC. The factory overhead budget for the coming period is $500,000, consisting of the following:
Cost Pool Budgeted Amount
Direct labor and facility support................. $150,000
Machine support......................................... 200,000
Machine setups........................................... 100,000
Design changes........................................... 50,000
Total........................................................... $500,000
The potential allocation bases and their estimated amounts were as follows:
Cost Pool Budgeted Amount
Number of design changes................................ 50
Number of setups.............................................. 200
Machine hours................................................... 10,000
Direct labor hours ............................................. 20,000
Required:
1. Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool. (Use each allocation base only once.)
2. Job 2525 required $25,000 for direct materials, $10,000 for direct labor, 500 direct labor hours, 1,000 machine hours, five setups, and three design changes. Determine the cost of Job 2525.