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Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct ma- terial and direct manufacturing labor costs are traced directly to each order. Marshall's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs Wages and salaries Depreciation Rent St80,000 60,000 120,000 240,000 $900,000 Other overhead Total overhead costs Marshall has established four activity cost pools and the following budgeted activity for each cost poot Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing labor support Order processing Design support Other Activity Measure Number of direct manufacturing labor-hours 30,000 direct manufacturing labor-hours Number of customer orders 500 orders 2,490 custom design-hours 30,000 direct manufacturing labor-hours Number of custom design-hours Facility-sustaining costs allocated to orders based on direct manufacturing labor-hours Some customer orders require more complex designs, while others need simple designs. Marshall esti- mates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1,410 design-hours. It estimates it will do 180 simple designs, which will each take 6 hours for a total of 1,080 design-hours. Paul Napoli, Marshall's controller, has prepared the following estimates for distribution of the over head costs across the four activity-cost pools: Design Support 30% Direct Manufacturing Labor Support Order Other Processing 25% Total 100% Wages and salaries Depreciation 40% 5% 25% 10% 15% 50% 100% Rent 30% 25% 10% 35% 100% Other overhead 20% 30% 35% 15% 100%

Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct ma- terial and direct manufacturing labor costs are traced directly to each order. Marshall's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs Wages and salaries Depreciation Rent St80,000 60,000 120,000 240,000 $900,000 Other overhead Total overhead costs Marshall has established four activity cost pools and the following budgeted activity for each cost poot Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing labor support Order processing Design support Other Activity Measure Number of direct manufacturing labor-hours 30,000 direct manufacturing labor-hours Number of customer orders 500 orders 2,490 custom design-hours 30,000 direct manufacturing labor-hours Number of custom design-hours Facility-sustaining costs allocated to orders based on direct manufacturing labor-hours Some customer orders require more complex designs, while others need simple designs. Marshall esti- mates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1,410 design-hours. It estimates it will do 180 simple designs, which will each take 6 hours for a total of 1,080 design-hours. Paul Napoli, Marshall's controller, has prepared the following estimates for distribution of the over head costs across the four activity-cost pools: Design Support 30% Direct Manufacturing Labor Support Order Other Processing 25% Total 100% Wages and salaries Depreciation 40% 5% 25% 10% 15% 50% 100% Rent 30% 25% 10% 35% 100% Other overhead 20% 30% 35% 15% 100%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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(in continuation with the picture) Order 277100 consists of four different metal products. Three products require a complex design and one requires a simple design. Order 277100 requires $4,550 of direct materials and 80 direct manufacturing labor-hours.

Q1.Determine the cost of Order 277100. 

Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct ma- terial and direct manufacturing labor costs are traced directly to each order. Marshall's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs Wages and salaries Depreciation Rent St80,000 60,000 120,000 240,000 $900,000 Other overhead Total overhead costs Marshall has established four activity cost pools and the following budgeted activity for each cost poot Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing labor support Order processing Design support Other Activity Measure Number of direct manufacturing labor-hours 30,000 direct manufacturing labor-hours Number of customer orders 500 orders 2,490 custom design-hours 30,000 direct manufacturing labor-hours Number of custom design-hours Facility-sustaining costs allocated to orders based on direct manufacturing labor-hours Some customer orders require more complex designs, while others need simple designs. Marshall esti- mates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1,410 design-hours. It estimates it will do 180 simple designs, which will each take 6 hours for a total of 1,080 design-hours. Paul Napoli, Marshall's controller, has prepared the following estimates for distribution of the over head costs across the four activity-cost pools: Design Support 30% Direct Manufacturing Labor Support Order Other Processing 25% Total 100% Wages and salaries Depreciation 40% 5% 25% 10% 15% 50% 100% Rent 30% 25% 10% 35% 100% Other overhead 20% 30% 35% 15% 100%
Transcribed Image Text:Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct ma- terial and direct manufacturing labor costs are traced directly to each order. Marshall's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs Wages and salaries Depreciation Rent St80,000 60,000 120,000 240,000 $900,000 Other overhead Total overhead costs Marshall has established four activity cost pools and the following budgeted activity for each cost poot Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing labor support Order processing Design support Other Activity Measure Number of direct manufacturing labor-hours 30,000 direct manufacturing labor-hours Number of customer orders 500 orders 2,490 custom design-hours 30,000 direct manufacturing labor-hours Number of custom design-hours Facility-sustaining costs allocated to orders based on direct manufacturing labor-hours Some customer orders require more complex designs, while others need simple designs. Marshall esti- mates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1,410 design-hours. It estimates it will do 180 simple designs, which will each take 6 hours for a total of 1,080 design-hours. Paul Napoli, Marshall's controller, has prepared the following estimates for distribution of the over head costs across the four activity-cost pools: Design Support 30% Direct Manufacturing Labor Support Order Other Processing 25% Total 100% Wages and salaries Depreciation 40% 5% 25% 10% 15% 50% 100% Rent 30% 25% 10% 35% 100% Other overhead 20% 30% 35% 15% 100%
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