Kauler Industries, a family-run small manufacturer, has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: (Click the icon to view activities, total MOH costs, and cost drivers.) During May, Evan and Allison Kauler machined and assembled Job 553. Evan worked a total of 13 hours on the job, while Allison worked 5 hours on the job. Evan is paid a $23 per hour wage rate, while Allison is paid $29 per hour because of her additional experience level. Direct materials requisitioned for Job 553 totalled $1,250. The following additional information was collected on Job 553: the job required 2 machine set-ups, 6 machine hours, and 3 quality control tests. 1. Compute the activity cost allocation rates for the year. 2. Complete the job cost record for Job 553. Requirement 1. Compute the activity cost allocation rates for the year. First, determine the formula to compute the allocation rate for the activity-based cost rate, and then calculate the rate for each activity. (Round your answers to the nearest whole dollar.) Show Transcribed Text Activity Machine set-up ... 2 Activities, total MOH costs, and cost drivers S Estimated Total Manufacturing Overhead Costs 168,000 Estimated Total Usage of Cost Driver 3,300 set-ups Activity cost allocation rate - Xx
Kauler Industries, a family-run small manufacturer, has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: (Click the icon to view activities, total MOH costs, and cost drivers.) During May, Evan and Allison Kauler machined and assembled Job 553. Evan worked a total of 13 hours on the job, while Allison worked 5 hours on the job. Evan is paid a $23 per hour wage rate, while Allison is paid $29 per hour because of her additional experience level. Direct materials requisitioned for Job 553 totalled $1,250. The following additional information was collected on Job 553: the job required 2 machine set-ups, 6 machine hours, and 3 quality control tests. 1. Compute the activity cost allocation rates for the year. 2. Complete the job cost record for Job 553. Requirement 1. Compute the activity cost allocation rates for the year. First, determine the formula to compute the allocation rate for the activity-based cost rate, and then calculate the rate for each activity. (Round your answers to the nearest whole dollar.) Show Transcribed Text Activity Machine set-up ... 2 Activities, total MOH costs, and cost drivers S Estimated Total Manufacturing Overhead Costs 168,000 Estimated Total Usage of Cost Driver 3,300 set-ups Activity cost allocation rate - Xx
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter5: Product And Service Costing: Job-order System
Section: Chapter Questions
Problem 22E: CleanCom Company specializes in cleaning commercial buildings and construction sites. Each building...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Kauler Industries, a family-run small manufacturer, has adopted an ABC costing system. The following
manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year:
(Click the icon to view activities, total MOH costs, and cost drivers.)
During May, Evan and Allison Kauler machined and assembled Job 553. Evan worked a total of 13 hours on the job,
while Allison worked 5 hours on the job. Evan is paid a $23 per hour wage rate, while Allison is paid $29 per hour
because of her additional experience level. Direct materials requisitioned for Job 553 totalled $1,250. The following
additional information was collected on Job 553: the job required 2 machine set-ups, 6 machine hours, and 3 quality
control tests.
1. Compute the activity cost allocation rates for the year.
2. Complete the job cost record for Job 553.
Requirement 1. Compute the activity cost allocation rates for the year.
First, determine the formula to compute the allocation rate for the activity-based cost rate, and then calculate the rate
for each activity. (Round your answers to the nearest whole dollar.)
Show Transcribed Text
Activity
Machine set-up.
Machining.
Quality control.
v
Activities, total MOH costs, and cost drivers
C
Estimated Total
$
$
$
Manufacturing
Overhead Costs
168,000
1,030,000
349,000
Estimated Total
Usage of
Cost Driver
3,300 set-ups
5,400 machine hours
5,300 tests run
Activity cost allocation
rate
X
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