Marko Manufacturing Co. uses activity-based costing. The factory overhead budget for the coming period is $750,000, consisting

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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Principles of Cost Accounting

ISBN: 978-1133187868

16th edition

Authors: Edward J. Vanderbeck

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