Imai Draperies makes custom draperies for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools.

	Overhead costs:
	Production overhead		$240,000
	Office expense		160,000
	Total		$400,000
	Distribution of resource consumption:
				Making			Job
	Activity Cost Pools			Drapes			Support	Other	Total
	Production overhead			35%			45%	20%	100%
	Office expense			15%			55%	30%	100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows:
	Activity Cost Pool	Annual Activity
	Making drapes	4,000 yards
	Job support	100 jobs
	Other	Not applicable

Required:

a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

		Making	Job
		Drapes	Support	Other	Total
	Production overhead
	Office expense
	Total
b. Compute the activity rates (i.e., cost per unit of activity) for the Making Drapes and Job Support activity cost pools by filling in the table below:
		Making	Job
		Drapes	Support
	Production overhead
	Office expense
	Total

c. Prepare an action analysis report in good form of a job that involves making 53 yards of drapes and has direct materials and direct labor cost of $1,480. The sales revenue from this job is $5,200. For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; production overhead as a Red cost; and office expense as a Yellow cost.

Answer rating: 100% (QA)

Solution aFirst stage allocation of overhead Making Job Other total drape... View the full answer