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Exercise 17-14 Activity-based costing LO P3 A2 Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,500 6,000 18,000 $ 33,500 10,600 ft. $ 3.16 Squared Edge Total $ 21,500 $ 31,000 12,000 18,000 36,000 54,000 $ 69,500 $ 103,000 14,100 ft. $ 4.93 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead Cost $ 2,160 28,840 23,000 $ 54,000 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,000 400 hours 31 times Squared Edge $12,000 600 hours 95 times Total $18,000 1,000 hours 126 times Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Cost Activity Drivers $ 18,000 Direct labor cost $ 2,160 Activity Supervision Depreciation of machinery Assembly line preparation Activity Rate 12.001% of direct labor cost $ 28.84 Per machine hour $ 182.54 Per setup 1,000 Machine hours 28,840 23,000 126 Setups Rounded edge Activity rate Activity driver incurred Overhead assigned 30.65% Supervision Depreciation of machinery Assembly line preparation Activity rate Activity driver incurred Overhead assigned Squared edge Components Supervision Depreciation of machinery Assembly line preparation 12.00 % 0 $ 28.84 0 $ 182.54 0 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge