3. ACTIVITY-BASED COSTING, COST DRIVERS Southern Metals Company's controller has established these overhead cost pools and cost drivers for 2001: Budgeted Overhead Expected Cost Driver Overhead Cost Pool Activity Level Machine setups $117,868 Number of setups 40 Power 341,120 Machine-hours 21,320 Materials handling 85,000 Materials weight 34,000 Ib. Quality control 143,500 Number of units 82,000 units Other overhead 184,500 Direct labor-hours 14,760 hours $871,988 During March 2001, Southern received an order for 1,500 machine tools and produced them. The order required the following: Machine setups 7 Machine-hours 3,250 Materials 4,250 Ib. Direct labor-hours 2,750 hours Required 1. Calculate the predetermined factory overhead rates for cost drivers. What was the total factory overhead assigned to fill the order under the activity-based costing approach? 2. 3. Suppose that a single predetermined factory overhead rate based on machine-hours was used to apply factory overhead. What was the pre- determined factory overhead rate? What amount of factory overhead was applied to the order?

3. ACTIVITY-BASED COSTING, COST DRIVERS Southern Metals Company's controller has established these overhead cost pools and cost drivers for 2001: Budgeted Overhead Expected Cost Driver Overhead Cost Pool Activity Level Machine setups $117,868 Number of setups 40 Power 341,120 Machine-hours 21,320 Materials handling 85,000 Materials weight 34,000 Ib. Quality control 143,500 Number of units 82,000 units Other overhead 184,500 Direct labor-hours 14,760 hours $871,988 During March 2001, Southern received an order for 1,500 machine tools and produced them. The order required the following: Machine setups 7 Machine-hours 3,250 Materials 4,250 Ib. Direct labor-hours 2,750 hours Required 1. Calculate the predetermined factory overhead rates for cost drivers. What was the total factory overhead assigned to fill the order under the activity-based costing approach? 2. 3. Suppose that a single predetermined factory overhead rate based on machine-hours was used to apply factory overhead. What was the pre- determined factory overhead rate? What amount of factory overhead was applied to the order?

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Description: 3.ACTIVITY-BASED COSTING, COST DRIVERS Southern Metals Company'scontroller has established these overhead cost pools and cost drivers for2001:BudgetedOverheadExpectedCost DriverOverhead Cost PoolActivity LevelMachine setups$117,868Number of setups40

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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