Julio Manufacturing Company uses activity-based costing. The factory overhead budget for the coming period is $500,000, consisting

Question:

Julio Manufacturing Company uses activity-based costing. The factory overhead budget for the coming period is $500,000, consisting of the following:

Cost Pool Budgeted Amount

Direct labor support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000

Machine support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000

Machine setups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000

Design changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500,000

The potential allocation bases and their estimated amounts were as follows:

Cost Pool Budgeted Amount

Number of design changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Number of setups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Machine hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 10,000

Direct labor hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Required:

1. Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool.

2. Job 2525 required $25,000 for direct materials, $10,000 for direct labor, 500 direct labor hours, 1,000 machine hours, five setups, and three design changes. Determine the cost of Job 2525.


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Principles Of Cost Accounting

ISBN: 9780840037039

15th Edition

Authors: Edward J. Vanderbeck

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