Luxury Awnings makes custom awnings for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools: Overhead Costs: Production overhead $200,000 Office expense 100,000 Total $300,000 Distribution of resource consumption: Activity Cost Pools Making Awnings Job Support Other Total Production overhead 55 % 35 % 10% 100% Office expenses 8% 75% 17% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Annual Activity Making awnings 5,000 metres Job support 200 jobs Other Not applicable Required: a) Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: Making Awnings Job Support Other Total Production overhead Office expense Total b) Compute the activity rates (i.e., cost per unit of activity) for the Making Awnings and Job Support activity cost pools by filling in the table below: Making Awnings Job Support Production overhead Office expense Total c) Prepare a report in good form of a job that involves making 80 yards of awnings and has direct materials and direct labour cost of $3,000. The sales revenue from this job is $4,000.
Luxury Awnings makes custom awnings for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools: Overhead Costs: Production overhead $200,000 Office expense 100,000 Total $300,000 Distribution of resource consumption: Activity Cost Pools Making Awnings Job Support Other Total Production overhead 55 % 35 % 10% 100% Office expenses 8% 75% 17% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Annual Activity Making awnings 5,000 metres Job support 200 jobs Other Not applicable Required: a) Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: Making Awnings Job Support Other Total Production overhead Office expense Total b) Compute the activity rates (i.e., cost per unit of activity) for the Making Awnings and Job Support activity cost pools by filling in the table below: Making Awnings Job Support Production overhead Office expense Total c) Prepare a report in good form of a job that involves making 80 yards of awnings and has direct materials and direct labour cost of $3,000. The sales revenue from this job is $4,000.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Luxury Awnings makes custom awnings for homes and
businesses. The company uses an activity-based
costing system for its overhead costs. The company has
provided the following data concerning its annual
overhead costs and its activity cost pools:
Overhead Costs:
Production overhead $200,000
Office expense 100,000
Total $300,000
Distribution of resource consumption:
Activity Cost Pools
Making Awnings Job Support Other Total
Production overhead 55 % 35 % 10% 100%
Office expenses 8% 75% 17% 100%
The "Other" activity cost pool consists of the costs of
idle capacity and organization-sustaining costs. The
amount of activity for the year is as follows:
Activity Cost Pool Annual Activity
Making awnings 5,000 metres
Job support 200 jobs
Other Not applicable
Required:
a) Prepare the first-stage allocation of overhead costs
to the activity cost pools by filling in the table below:
Making Awnings Job Support Other Total
Production overhead
Office expense
Total
b) Compute the activity rates (i.e., cost per unit of
activity) for the Making Awnings and Job Support
activity cost pools by filling in the table below:
Making Awnings Job Support
Production overhead
Office expense
Total
c) Prepare a report in good form of a job that involves
making 80 yards of awnings and has direct materials
and direct labour cost of $3,000. The sales revenue
from this job is $4,000.
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