Quizchap3ABCSystem - Usually bids are based upon full...

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Dr. Kiani Acct 230 Chap. 3 ABC. Qui z ABC Manufacturing has four activities of overhead. The four activities and expected overhead costs for each activity for next year are as follows: Activities Expected Activity Driver/year Maintenance $200,000 20,000 Machine hours Materials handling 32,000 1,600 Moves Setups 100,000 2,500 Setups Inspection 120,000 4,000 Inspections -------------- Total 452,000 ========== Currently, overhead is applied using a single rate based upon budgeted direct labor hours. 50.000 direct labor hours are budgeted for next year. The ABC Company has been asked to submit a bid for a proposed job. The plant manager feels getting this job would result in new business in future years.
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Unformatted text preview: Usually bids are based upon full manufacturing costs plus 20 percent. Estimates for the proposed job are listed below: Direct materials $6,000 Direct labor (1,000 Hours @$10/hr 10,000 # of material moves 12 # of inspections 10 # of setups 2 # of machine hours 500 In the past, full manufacturing cost has been computed by allocating overhead using a single rate using DLH. The plant manager has heard of a new way of applying overhead using ABC method. REQUIRED: 1. Determine the bid price for the proposed job using a single rate based upon direct labor hours. 2. Determine the bid price for the proposed job using ABC method...
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