Chapter 4, Problem 4.6SE

Calculate a job cost using ABC (Learning Objective 2)

Oliver Industries, a small, family-run manufacturer, has adopted an ABC system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year:

Activity	Estimated Total Manufacturing Overhead Costs	Estimated Total Usage of Cost Driver
Machine setup	$161,650	3,050 setups
Machining	$1,100,000	5,000 machine hours
Quality control	$360,000	4,500 tests run

During May, Jeff and Arabella Oliver machined and assembled Job 557. Jeff worked a total of 10 hours on the job, while Arabella worked 4 hours on the job. Jeff is paid a $25 per hour wage rate, while Arabella is paid $28 per hour because of her additional experience level. Direct materials requisitioned for Job 557 totaled $1,250. The following additional information was collected on Job 557: the job required 2 machine setups, 6 machine hours, and 3 quality control tests.

1. 1. Compute the activity cost allocation rates for the year.
2. 2. Complete the following job cost record for Job 557:

Job Cost Record Job 557	Manufacturing Costs
Direct materials	?
Direct labor	?
Manufacturing overhead	?
Total job cost	$ ?