ACC560 Week 3 Homework: Chapter 4: Activity-Based Costing BE4-7 Spid.Inc. a manu

Question

ACC560 Week 3 Homework: Chapter 4: Activity-Based Costing BE4-7 Spid.Inc. a manufacturer of Foumnet potato d ".empleys acti ryhased costing. The budgeted data for each of the activity cost pools is provided helow for the year 2017 Estimated S-84,000 Expeeted Use of Activity Cost PoolsOverhead Cost Drivers per Activity / -12000 orders Ordering and receiving Food processing Packaging 480,000 60,000 machine hours 1,760,000/440,000 lahor hours For 2017, the company had 11,000 orders and used 50,000 machine hours, and lahor hours totaled 500,000, What is the total overhead applied? BE4-12 Spin Cycle Architecture uses three activity pools to apply overhcad to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $40,000, design $300,000, and constnuction oversight $100,000. The cost drivers and expected use are as follows Expected Use of Cost Drivers per Activi 20 50,000 Activities Initial concept formation Design Construction oversight Number of project changes Square feet 100 Number of months (a) Compute the predetermined overhcad rate for each activity. (b) Classify each of these activitics as unit-level, batch-level, product-level, or facility-level.

Explanation / Answer

4-7 Calculation of OH rate Activity cost pools Estimated OH Expected use of cost drivers OH rate A B C D=B/C Ordering and receiving 84000 12000 7 Food processing 480000 60000 8 Packaging 1760000 440000 4 Calculation of applied OH Activity Number of cost drivers OH rate Total OH A B C D=B*C Orders received 11000 7          77,000 Machine hours 50000 8       400,000 Labor hours 500000 4    2,000,000 Total    2,477,000 4-12 Calculation of OH rate Activity cost pools Estimated OH Expected use of cost drivers OH rate Classification A B C D=B/C Initial concept formation 40000 20 2000 Product level Design 300000 150000 2 Unit level Construction oversight 100000 100 1000 Facility level

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