24. Activity-Based Costing Bugsy Corp. has the following historical data for ove

Question

24. Activity-Based Costing Bugsy Corp. has the following historical data for overhead from the past year Human Resources: Information Technology Power Cost S 80,000 30,000 250,000 Activity Driver 1,000 employees 2,000 computers 25,000 kilowatt hours Job # l is expected to use 5 employees, 5 computers, and 2,000 kilowatt hours. a. What is the RATE used to apply HR overhead? ANSWER: b. What is the RATE used to apply IT overhead? ANSWER: c. What is the RATE used to apply Power overhead? ANSWER: d. How much total overhead in dollars should be applied to Job # 1? ANSWER:

Explanation / Answer

Solution:

a. Rate used to apply HR overhead = HR cost ÷ number of employees

= $80,000 ÷ 1,000

= $80 per employee

b. Rate used to apply IT overhead = IT cost ÷ number of computers

= $30,000 ÷ 2,000

= $15 per computer

c. Rate used to apply Power overhead = Power cost ÷ number of Kilowatts hours

= $250,000 ÷ 25,000

= $10 per kilowatt hour

d. Total overhead applied to Job 1 = 5 x$80 + 5 x $15 + 2000 x $10

= $20,475

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