Exercise 182 American Delights manufactures a wide variety of holiday and season

Question

Exercise 182

American Delights manufactures a wide variety of holiday and seasonal decorative items. American's activity-based costing overhead rates are:

The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 40 direct labor hours. The cost of direct materials on the job was $19,000 and the direct labor rate is $30 per hour.

Determine the total cost of the Snow Man project.

Purchasing $380 per order Storing $2 per square foot/days Machining $100 per machine hour Supervision $5 per direct labor hour

Explanation / Answer

Answer:

Total Cost = Direct Materials + Direct Labor + Overhead Cost

Overhead Cost:
Purchasing = $380 * 3 = $1,140
Storing= $2 * 4,000 = $8,000
Machining = $100 *60 = $6,000
Supervision = $5 * 40 = $200

Total Overhead Cost = $1,140 + $8,000 + $6,000 + $200
Total Overhead Cost = $15,340

Total Cost = $19,000 + ($30 * 40) + $15,340
Total Cost = $19,000 + $1,200 + $15,340
Total Cost = $35,540

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