Use activity-based costing to determine amount of overhead applied to a specific job (calculations required). Great Lakes
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Question:
Use activity-based costing to determine amount of overhead applied to a specific job (calculations required). Great Lakes Company (GLC) manufactures high-end custom couches. GLC usually uses a manufacturing overhead by applying a traditional predetermined manufacturing overhead based on direct labor hours, this year is predetermined to be $25 DLH. The new controller is evaluating the use of activity-based driver rates to apply manufacturing overhead costs and has assembled the following budgeted amounts and actual activity required to produce Job #343.
Activity driver | Budgeted cost ($) | Budgeted activity (hours) | Activity used on Job # 343 (hours) |
Machining time | 70,500 | 1,500 | 24 |
Direct labor time | 84,000 | 4,000 | 250 |
Quality inspection time | 12,500 | 500 | 200 |
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