Osborn Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and...

         

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Osborn Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: (Click the icon to view the activity costs and drivers.) Data table Activity Machine setup. Machining... Polishing.... Quality control.. Facility-level costs... Total manufacturing overhead (MOH).. Total estimated MOH costs related to activity 154,000 580,000 78,000 337,500 270,000 1,419,500 Total estimated amount of allocation base activity 2,200 setups 4,000 machine hours 13,000 polishing cloths 4,500 tests run 90,000 DL hours Data table 1 machine setup required 5 machine hours 4 polishing cloths 2 quality control tests run The Job Cost Record for Job #624 revealed that direct materials requisitioned for the job totaled $1,100. The Job Cost Record also showed that direct labor for this job totaled 5 hours at a wage rate of $22 per hour. Other data collected on the resources used by Job #624 included: (Click the icon to view the other data.) Read the requirements. Requirements Calculate the activity cost allocation rate for each of the five pools listed in the table. 1. 2. Calculate the total cost of Job #624 (use an ABC costing system). 3. Why would ABC provide a more accurate allocation of manufacturing overhead (MOH) than a plantwide rate? 4. Assume that Osborn Products used a traditional costing system rather than an ABC system. Its plantwide MOH rate would have been determined using direct labor (DL) hours as the allocation base. How much cost distortion would have occurred on this job? Osborn Products has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and cost drivers have been identified: (Click the icon to view the activity costs and drivers.) Data table Activity Machine setup. Machining... Polishing.... Quality control.. Facility-level costs... Total manufacturing overhead (MOH).. Total estimated MOH costs related to activity 154,000 580,000 78,000 337,500 270,000 1,419,500 Total estimated amount of allocation base activity 2,200 setups 4,000 machine hours 13,000 polishing cloths 4,500 tests run 90,000 DL hours Data table 1 machine setup required 5 machine hours 4 polishing cloths 2 quality control tests run The Job Cost Record for Job #624 revealed that direct materials requisitioned for the job totaled $1,100. The Job Cost Record also showed that direct labor for this job totaled 5 hours at a wage rate of $22 per hour. Other data collected on the resources used by Job #624 included: (Click the icon to view the other data.) Read the requirements. Requirements Calculate the activity cost allocation rate for each of the five pools listed in the table. 1. 2. Calculate the total cost of Job #624 (use an ABC costing system). 3. Why would ABC provide a more accurate allocation of manufacturing overhead (MOH) than a plantwide rate? 4. Assume that Osborn Products used a traditional costing system rather than an ABC system. Its plantwide MOH rate would have been determined using direct labor (DL) hours as the allocation base. How much cost distortion would have occurred on this job?

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1 Calculate the activity cost allocation rates as follows Machine Set up Allocation Rate1540002200 s... View the full answer