After reading an article about activity-based costing in a trade journal for the furniture industry, Santana...

 

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After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. Activity Setting up machines Inspecting components Providing utilities Direct materials Direct labor Batches Cost $ 22,000 9,500 12,000 Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 6.15. Driver 25 batches 5,000 parts 5,000 machine hours 1. Total manufacturing cost 2. Total manufacturing cost $ 3,300 4,300 2 batches Number of parts Machine hours 400 parts 600 machine hours. Required 1. What is the total cost of Job 6.15 if Business Solutions applies overhead at 50% of direct labor cost? 2. What is the total cost of Job 6.15 if Business Solutions uses activity-based costing? After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. Activity Setting up machines Inspecting components Providing utilities Direct materials Direct labor Batches Cost $ 22,000 9,500 12,000 Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 6.15. Driver 25 batches 5,000 parts 5,000 machine hours 1. Total manufacturing cost 2. Total manufacturing cost $ 3,300 4,300 2 batches Number of parts Machine hours 400 parts 600 machine hours. Required 1. What is the total cost of Job 6.15 if Business Solutions applies overhead at 50% of direct labor cost? 2. What is the total cost of Job 6.15 if Business Solutions uses activity-based costing?

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Ans 1 Ans 2 Particulars Direct materials Direct labor cost Overh... View the full answer