S.ch04 - EXERCISE 4-2 (a) Estimated overhead =...

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EXERCISE 4-2 (a) Estimated overhead = Predetermined overhead rate Direct labor costs $270,000 = 180% of direct labor cost $50,000 + $100,000 (b) Activity cost pools Cost drivers Estimated overhead Machining Machine hours $170,000 Machine setup Set up hours 100,000 Activity-based overhead rates Machining: Machine setup: $170,000 = $85 per machine hour $100,000 = $200 per setup hour 1,000 + 1,000 500 (c) Traditional costing Standard Custom $50,000 X 1800% $90,000 $100,000 X 180% $180,000 $90,000 $180,000 Activity-based costing Machining: 1,000 X $85 $85,000 1,000 X $85 $85,000 Machine setup: 100 X $200 20,000 400 X $200 80,000 $105,000 $165,000
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EXERCISE 4-4 (a) Traditional costing: $204,000 ÷ 2,400 (600 + 1,800) hours = $85 per direct labor hour (1) One mobile safe: 600 hours X $85 = $51,000 $51,000 ÷ 200 = $255 each (2) One walk-in safe: 1,800 hours X $85 = $153,000 $153,000 ÷ 50 = $3,060 each (b) Activity-based costing: (1) Material handling costs $120,000 ÷ 500 (300 + 200) moves = $240 per move (a) One mobile safe: 300 moves X $240 = $72,000 $72,000 ÷ 200 = $360 each (b) One walk-in safe: 200 moves X $240 = $48,000 $48,000 ÷ 50 = $960 each (2) Purchasing activity costs $84,000 ÷ 800 (450 + 350) orders = $105 per order (a) One mobile safe: 450 orders X $105 = $47,250 $47,250 ÷ 200 = $236.25 each (b) One walk-in safe: 350 orders X $105 = $36,750 $36,750 ÷ 50 = $735 each
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EXERCISE 4-4 (Continued) (c) The total amount of overhead allocated to each unit of the
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S.ch04 - EXERCISE 4-2 (a) Estimated overhead =...

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