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After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total Budgeted Cost $ 20,000 7,500 10,000 $ 37,500 The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours $ 2,500 $ 3,500 $ Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) 2 setups 400 parts inspected. 600 machine hours Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level.

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total Budgeted Cost $ 20,000 7,500 10,000 $ 37,500 The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours $ 2,500 $ 3,500 $ Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) 2 setups 400 parts inspected. 600 machine hours Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level.

FINANCIAL ACCOUNTING
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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After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours Budgeted Cost $ 20,000 7,500 10,000 $ 37,500 Required 1 Required 2 Setup Inspection Utilities 2 Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (c) Compute total product cost of Job 615. F2 W S Classify each of the three overhead activities as unit level, batch level, product level, or facility level. # $ 3 $ 2,500 $ 3,500 20 F3 E D 2 setups 400 parts inspected 600 machine hours Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) Required 3 6 4 <Required 1 Q F4 R LL % 65⁰ F5 T Required 2 > G Prev <6 1 of 4 MacBook Air F6 Y & 7 H Next > ܠ F7 U * 00 8 J F8 I 9 F9 K O 0
Transcribed Image Text:After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Activity Set up Inspection Utilities Total The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours Budgeted Cost $ 20,000 7,500 10,000 $ 37,500 Required 1 Required 2 Setup Inspection Utilities 2 Required: 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity-based costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (c) Compute total product cost of Job 615. F2 W S Classify each of the three overhead activities as unit level, batch level, product level, or facility level. # $ 3 $ 2,500 $ 3,500 20 F3 E D 2 setups 400 parts inspected 600 machine hours Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) Required 3 6 4 <Required 1 Q F4 R LL % 65⁰ F5 T Required 2 > G Prev <6 1 of 4 MacBook Air F6 Y & 7 H Next > ܠ F7 U * 00 8 J F8 I 9 F9 K O 0
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