Problem Activity Based CostingZeta company has identified the following overhead costs and costdrivers for the upcoming yearExpectedCostsOverhead ItemCost DriverQuantityNumber ofSetup costs$45,000300setupsNumber ofMaterial Handling$90,0007,500material movesNumber ofQuality Cost$150,0006,000InspectionsMachining Cost$67,500 Machine Hours900Total$352,500The following information was collected on three jobs that werecompleted during the yearJob 201$6,000$2,800Job 202$12,000$2,000Job 203$8,000$4,000Direct materialsDirect laborUnits completed30150Direct labor-hours182215Machine hours105010Number of setups14Number of Inspections1030Number of material1050movesFor the year the company budgeted direct labor cost of $100,000,budgeted direct material cost of $280,000, and estimated labor hoursof 5,000.Determine the unit cost for each job using Activity Based Costing.(Round amounts to 2 decimal places.)2030

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Accounting

Determine the unit cost for each job using Activity Based Costing. (Round amounts to 2 decimal places.)

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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Problem Activity Based Costing
Zeta company has identified the following overhead costs and cost
drivers for the upcoming year
Expected
Costs
Overhead Item
Cost Driver
Quantity
Number of
Setup costs
$45,000
300
setups
Number of
Material Handling
$90,000
7,500
material moves
Number of
Quality Cost
$150,000
6,000
Inspections
Machining Cost
$67,500 Machine Hours
900
Total
$352,500
The following information was collected on three jobs that were
completed during the year
Job 201
$6,000
$2,800
Job 202
$12,000
$2,000
Job 203
$8,000
$4,000
Direct materials
Direct labor
Units completed
30
150
Direct labor-hours
18
22
15
Machine hours
10
50
10
Number of setups
1
4
Number of Inspections
10
30
Number of material
10
50
moves
For the year the company budgeted direct labor cost of $100,000,
budgeted direct material cost of $280,000, and estimated labor hours
of 5,000.
Determine the unit cost for each job using Activity Based Costing.
(Round amounts to 2 decimal places.)
20
30

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