In its production process, Oxford Corporation has four categories of overhead. Below is a schedule of their
Question:
In its production process, Oxford Corporation has four categories of overhead. Below is a schedule of their fiscal year 20x1 budgeted overhead costs and budgeted overhead cost driver activity for each overhead category:
Overhead Items and Related Cost Drivers | |||
Overhead Item | Budgeted Costs | Cost Driver | Budgeted Quantity |
Setup costs | $583,200 | Number of setups | 2,400 |
Ordering costs | 270,000 | Number of orders | 20,000 |
Maintenance | 928,000 | Machine-hours | 32,000 |
Power | 90,000 | Kilowatt-hours | 200,000 |
Oxford Corporation follows a job order cost system. Currently, in-house they have two activity production jobs. Following is a schedule detailing cost and cost driver activity for January 20x1:
Actual Cost, Units Produced & Cost Driver Activity | ||
For month-ending January 20x1 | ||
Job 626 | Job 627 | |
Direct production costs | ||
Direct materials | $9,000 | $10,000 |
Direct labor | $12,000 | $7,000 |
Actual units produced and cost driver activity | ||
Units produced | 750 | 600 |
Direct labor-hours | 45 | 110 |
Number of setups | 6 | 7 |
Number of orders | 8 | 15 |
Machine-hours | 180 | 150 |
Kilowatt-hours | 90 | 120 |
Required
- Prepare a schedule showing the cost driver allocation rates for allocating Oxford’s overhead cost to Job 626 and Job 627. (Round amounts to 2 decimal places.)
- Using the allocation rates derived above, allocate the overhead cost to each of Job 626 and Job 627.
- Prepare a schedule detailing Total Production Cost and Production Cost per unit for each of Job 626 and Job 627.
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman