Problem 5-52 Activity Cost Pools; Cost Drivers; Pool Rates (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-7)

The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.

Activity Cost Pool	Budgeted Overhead Cost			Cost Driver		Budgeted Level for Cost Driver		Pool Rate
Machine setups	$	375,000		Number of setups		125			$	3,000	per setup
Material handling		60,000		Weight of raw material		30,000	lb.		$	2	per pound
Hazardous waste control		25,000		Weight of hazardous chemicals used		5,000	lb.		$	5	per pound
Quality control		75,000		Number of inspections		1,000			$	75	per inspection
Other overhead costs		200,000		Machine hours		20,000			$	10	per machine hour
Total	$	735,000

An order for 5,000 boxes of medical-testing agent has the following production requirements.

Machine setups	5	setups
Raw material	10,000	pounds
Hazardous materials	2,000	pounds
Inspections	10	inspections
Machine hours	700	machine hours

Required: 1. Compute the total overhead that should be assigned to the medical-testing agent order. 2. What is the overhead cost per box of testing agent? a Total Overhead b Overhead cost per box

3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour. a. Overhead rate per machine hr

4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order? a. Total overhead b. Overhead cost per box of testing agent.