Problem One PLANT-WIDE RATE AND ACTIVITY-BASED COSTING The comptroller for Dougl

Question

Problem One PLANT-WIDE RATE AND ACTIVITY-BASED COSTING The comptroller for Douglas Inc. has established the following activity cost pools and cost drivers. Budgeted Overhead Cost Driver Budgeted Level for Cost Driver Activity Cost Pool Cost Machine setups Material handling W 1 Waste control Quality control Other overhead costs200.000 $200,000 100,000 50,000 75,000 Number of setups 160 Weight of material 50,000 kilograms Weight of chemicals 10,000 kilograms Number of inspections 300 Machine hours 20,000 Each order must be a minimum of 1,000 boxes of film chemicals. The production requirements for each minimum order are as follows: 5 setups 1,500 kilograms 200 kilograms 5 inspections 500 machine hours Machine setups Material handling Waste Control Quality Control Other Overhead Costs Required: 1 Calculate the overhead that should be assigned to each minimum order of film chemicals using the above data 2 Calculate the overhead that should be assigned to each minimum order of film chemicals if Douglas decides to use a single predetermined overhead rate based on machine hours.

Explanation / Answer

Statement of cost pool

1. overhead of each minimum order of film chemicals using abc costing

2.

SIngle pre determined overheaed rate method

total over head = 625000

Total machone hr = 20000

Machine hr required for minimum order = 500

Overhead assigned to minimum order = 625000/20000 X 500 = 15625  

Activity cost pool overhead amonut(A) cost driver Total quantity(B) Cost per driver(A/B) machine set up 200000 No. of set ups 160 1250 material handling 100000 weight of material 50000 2 waste control 50000 weight of chemicals 10000 5 quality control 75000 number of inspection 300 250 other overhead cost 200000 Machine hours 20000 10 Total 625000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.