Barker Inc. has identified the following overhead costs and cost drivers fore th

Question

Barker Inc. has identified the following overhead costs and cost drivers fore the upcoming year:

Overhead Item

Expected Cost

Cost Driver

Expected Quantity

Setup costs

$217777

Number of setups

457

Ordering costs

102196

Number of orders

3251

Maintenance

397246

Machine hours

4991

Power

34921

Kilowatt hours

63702

The following are two of the jobs completed during the year:

Job 400

Job 401

Direct materials

$642

$1857

Direct labour

$418

$2753

Direct labour hours

45

97

Number of setups

1

4

Number of orders

3

3

Machine hours

21

Kilowatt hours

33

43

The company’s normal activity is 3865 direct labour hours.

If Barker used direct labour hours to assign overhead, the total cost of Job 401 would be:

Select one:

a. $ 20733

b. $ 23486

c. $ 21629

d. $ 18876

The Lislevand plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:

Maintenance

$100578

Inspection

$204284

The plant’s expected capacity is 83792 direct labour hours. The following data has been assembled for use in developing a bid for a proposed job.

Direct materials

$?

Direct labour

$6454

Machine hours

401

Number of inspections

9

Direct labour hours

718

Total expected machine hours for all jobs during the year is 42898 and the total expected number of inspections is 2033.

Using activity-based costing and the appropriate cost drivers, if the total cost of the proposed job is $11823 what is the direct materials used in the job?

Select one:

a. $3524

b. $5369

c. $9978

d. $2757

Overhead Item

Expected Cost

Cost Driver

Expected Quantity

Setup costs

$217777

Number of setups

457

Ordering costs

102196

Number of orders

3251

Maintenance

397246

Machine hours

4991

Power

34921

Kilowatt hours

63702

Explanation / Answer

1) If Barker used direct labour hours to assign overhead, the total cost of Job 401 would be:

So answer is b) $23486

2) Using activity-based costing and the appropriate cost drivers, if the total cost of the proposed job is $11823 what is the direct materials used in the job

So answer is a) $3524

Job 401 Direct material 1857 Direct labour 2753 Overhead (752140/3865)*97 18876 Total 23486

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