Neal Company manufactures computer workstations. The company’s three activities and their overhead cost drivers follow.

Activity	Budgeted Cost	Activity Cost Driver	Budgeted Activity Usage
Fabrication	$ 80,000	Machine hours	1,600	machine hours
Assembly	96,000	Direct labor hours	2,000	direct labor hours
Inspection	72,000	Units inspected	6,000	units

Job 101’s actual activity usage along with a partial customer profitability report follow.

	Machine Hours		Direct Labor Hours		Units
Job 101	25	MH	30	DLH	10

Profitability Report—Job 101
Sales		$ 8,500
Cost of goods sold
Direct materials	$ 1,940
Direct labor	750
Overhead	?	?
Gross profit		?
Customer service costs		500
Customer income		?

Required:
1. Compute activity rates using activity-based costing.
2. Use the results from part 1 to allocate overhead cost to Job 101.
3. Complete the profitability report for Job 101.

Answer rating: 100% (QA)

1 Computation of activity rates using activitybased costing Activity ... View the full answer