A company has identified the following overhead costs and cost drivers for the coming year. Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level Machine setup No. of setups $ 20,000 200 Inspection Inspectio n No. of inspections $130,000 6,500 Material handling No. of material moves $ 80,000 8,000 Engineering Engineering hours $ 50,000 1,000 $280,000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials $5,000 $12,000 $8,000 Direct labor $2,000 $ 2,000 $4,000 Units completed 100 50 200 Number of setups 1 2 4 Number of inspections 20 10 30 Number of material moves 30 10 50 Engineering hours 10 50 10 Budgeted direct labor cost was $100,000, and budgeted direct material cost was $280,000. 14. If the company uses activity-based costing, how much overhead overhead cost should be allocable to Job 101? a. $1,300 b. $2,000 c. $5,000 d. $5,600 15. If the company uses activity-based costing, compute compute the cost of each unit of Job 102. a. $340 b. $392 c. $440 d. $520 16. The company prices its products at 140% of cost. If the company uses activity-based costing, the price of each unit of Job 103 would be a. $98 b. $100 c. $116 d. $140 Scottso Enterprises incurs $300,000 in manufacturing overhead costs each month. The company has been allocating overhead to individual product lines based on direct labor hours Amount Amount of Cost driver In Pool Activity -------------------------Direct labor hours $100,000 15,000 Number of batches 150,000 200 Design changes 50,000 125 -------Total overhead costs $300,000 ======== Two products have the following characteristics: Product X Product Y --------- --------Direct labor hours 1,000 400 Number of batches 10 20 Design changes 1 15
a. Determine the overhead to be allocated to each product using direct labor hours as the only cost driver. b. Determine the overhead to be allocated to each product using the three drivers identified.
Gilmore Company produces two products in a single factory. The following production and cost information has been determined: Model 1 Model 2 Units produced 1,000 200 Material moves (total) 100 40 Testing time (total) 250 125 Direct labor hours per unit 1 5 The controller has determined total overhead to be P480,000. P140,000 relates to material moves; P150,000 relates to testing; the remainder is related to labor time. 1. If Gilmore uses direct labor hours to allocate overhead to each model, what would overhead per unit be for each model? 2. If Gilmore uses activity-based costing to allocate overhead to each model, what would overhead per unit be each model?
