Calculating Activity-based Costing Overhead Rates Assume that manufacturing overhead for Glassman Company in the previous exercise consisted of the following activities and costs: Setup (1,000 set

Calculating Activity-based Costing Overhead Rates

Assume that manufacturing overhead for Glassman Company in the previous exercise consisted of the following activities and costs:

Setup (1,000 setup hours) $144,000

Production scheduling (400 batches) 60,000

Production engineering (60 change orders) 120,000

Supervision (2,000 direct labor hours) 56,000

Machine maintenance (12,000 machine hours) 84,000

Total activity costs $464,000

The following additional data were provided for Job 845:

Direct materials costs $7,000

Direct labor cost (5 Milling direct labor hours;

35 Finishing direct labor hours) $1000

Setup hours 5 hours

Production scheduling 1 batch

Machine hours used (25 Milling machine hours;

5 Finishing machine hours 30 hours

Production engineering 3 change orders

a. Calculate the cost per unit of activity driver for each activity cost category.

b. Calculate the cost of Job 845 using ABC to assign the overhead costs.

c. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours calculated in the previous exercise.

d. Calculate the cost of Job 845 using the machine hour departmental overhead rate for the Milling Department and a direct labor hour overhead rate for the Finishing Department.

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Calculating Activity-based Costing Overhead Rates
Assume that manufacturing overhead for Glassman Company in the previous exercise consisted
of the following activities and costs:
Setup (1,000 setup hours)
$144,000
Production scheduling (400 batches)
60,000
Production engineering (60 change orders)
120,000
Supervision (2,000 direct labor hours)
56,000
Machine maintenance (12,000 machine hours)
84,000
Total activity costs
$464,000
The following additional data were provided for Job 845:
Direct materials costs
$7,000
Direct labor cost (5 Milling direct labor hours;
35 Finishing direct labor hours)
$1000
Setup hours
5 hours
Production scheduling
1 batch
Machine hours used (25 Milling machine hours;
5 Finishing machine hours
30 hours
Production engineering
3 change orders
a.
Calculate the cost per unit of activity driver for each activity cost category.
b.
Calculate the cost of Job 845 using ABC to assign the overhead costs.
c.
Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours
calculated in the previous exercise.
d.
Calculate the cost of Job 845 using the machine hour departmental overhead rate for the
Milling Department and a direct labor hour overhead rate for the Finishing Department.

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