Glassworks Inc. produces two types of glass shelving, rounded edge and squared e

Question

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data.
  

  
Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $53,700 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information.

  
She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)

Rounded Edge Squared Edge Total Direct materials $ 9,600 $ 21,800 $ 31,400 Direct labor 6,100 11,800 17,900 Overhead (300% of direct labor cost) 18,300 35,400 53,700 Total cost $ 34,000 $ 69,000 $ 103,000 Quantity produced 10,400 ft. 14,200 ft. Average cost per ft. (rounded) $ 3.27 $ 4.86

Explanation / Answer

ANS

1)

TOTAL OVERHEAD = $16100.64

TOTAL OVERHEADCOST = $37598.88

2)

ACTIVITY OVERHEAD COST ACTIVITY DRIVERS ACTIVITY RATE SUPERVISION $2148 $17900 DIRECT LABOR COST 12% OF DIRECT LABOR COST DEPRECIATION OF MACHINERY $28680 1200 HOURS $23.9 PER MACHINE HOUR ASSEMBLY LINE PREPARATION $22872 126 TIMES $181.52 PER SET UP

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