Fast Company has established the following overhead cost pools and cost drivers for the month of May: Cost Pool Overhead Costs Cost Driver Levels Purchase orders $ 25,040 40 orders Machine setups 50,000 100 setups Electricity 25,000 25,000 kilowatt hours The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Job M1 Job M2 Number of units produced 470 940 Number of purchase orders Number of setups 15 10 10 10 Number of kilowatt hours 470 940 What is the activity-based overhead rate per purchase order?

Fast Company has established the following overhead cost pools and cost drivers for the month of May: Cost Pool Overhead Costs Cost Driver Levels Purchase orders $ 25,040 40 orders Machine setups 50,000 100 setups Electricity 25,000 25,000 kilowatt hours The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Job M1 Job M2 Number of units produced 470 940 Number of purchase orders Number of setups 15 10 10 10 Number of kilowatt hours 470 940 What is the activity-based overhead rate per purchase order?

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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A manufacturer uses activity-based costing to assign overhead cost to products. Budgeted cost information for its activities follows. Budgeted Cost $ 210,600 Activity Cost Driver Purchase orders Square feet Budgeted Activity Usage 5,400 purchase orders 5,900 square feet 50 Setups Factory services 104,250 Setup 67,750 Setups Compute an activity rate for each activity. (Round your answers to 2 decimal places.) Activity Purchasing Activity Purchasing Factory services Setup Budgeted Cost 210,600 104,250 67,750 $ $ $ Budgeted Activity Usage Activity Rate
Kingsport Containers Company makes a single product that is subject to wide seasonal variations in demand. The company uses a job-order costing system and computes plantwide predetermined overhead rates on a quarterly basis using the number of units to be produced as the allocation base. Its estimated costs, by quarter, for the coming year are given below:QuarterFirst Second Third FourthDirect materials $ 320,000 $ 160,000 $ 80,000 $ 240,000Direct labor 160,000 80,000 40,000 120,000Manufacturing overhead 230,000 206,000 194,000 ?Total manufacturing costs (a) $ 710,000 $ 446,000 $ 314,000 $ ?Number of units to be produced (b) 160,000 80,000 40,000 120,000Estimated unit product cost (a) ÷ (b) $ 4.44 $ 5.58 $ 7.85 $ ?Management finds the variation in quarterly unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead because it is the largest…
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Fast Company has established the following overhead cost pools and cost drivers for the month of May: Cost Pool Overhead Costs Cost Driver Levels Purchase orders $ 11,280 20 orders Machine setups 49,000 100 setups Electricity 30,000 30,000 kilowatt hours The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Job M1 Job M2 Number of units produced 510 1,020 Number of purchase orders 15 10 Number of setups 25 10 Number of kilowatt hours 510 1,020 What is the activity-based overhead rate per purchase order?