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ABCproblem438 - $1,000,000 50,000 inspections $20.00 Mach...

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Problem 38 Activity Based Costing a) The problem gives sources of overhead and total overhead of $5,850,000 $5,850,000 / 1,000,000MH = $5.85/MH b) Cost of 2,500 doors under traditional costing Direct materials $50,000 Direct labor $150,000 Applied overhead (5000 * $5.85) $29,250 Total Costs $229,250 Divided by # of doors 2,500 Total cost per door $91.70 Computation of overhead drivers Activty Total Cost Total Units Measure Cost/Activity Unit Power $500,000 200,000 kwh $2.50 Work Cells $3,000,000 300,000 Sq ft $10.00 Matl handling $1,000,000 200,000 mat moves $5.00 Qlty ctrl ins
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Unformatted text preview: $1,000,000 50,000 inspections $20.00 Mach setups $350,000 25,000 setups $14.00 $5,850,000 c) Cost of 2,500 doors under Activity Based Costing Direct materials $50,000 Direct labor $150,000 Other costs Units of Act Cost/Unit Total Power 500 $2.50 $1,250 Work Cells 1000 $10.00 $10,000 Matl handling 20 $5.00 $100 Qlty ctrl ins 15 $20.00 $300 Mach setups 6 $14.00 $84 $11,734 Total Cost $211,734 Divided by # of doors 2,500 $84.69 Profitability Traditional ABC Cost $91.70 $84.69 plus: 40 %profit $36.68 $33.88 Total $128.38 $118.57...
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