Question

Marko Manufacturing Co. uses activity-based costing. The factory overhead budget for the coming period is $750,000, consisting of the following:
Cost Pool Budgeted Amount
Direct labor support . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000
Machine support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Machine setups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000
Design changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000
The potential allocation bases and their estimated amounts were as follows:
Cost Pool Budgeted Amount
Number of design changes . . . . . . . . . . . . . . . . ..... 75
Number of setups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

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 007 required $15,000 for direct materials, $20,000 for direct labor, 800 direct labor hours, 1,200 machine hours, six setups, and four design changes. Determine the cost of Job 007.



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  • CreatedMay 05, 2014
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