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Exercise 21-2 Activity-based costing of overhead L...




Exercise 21-2 Activity-based costing of overhead L.O. P2 Northwest Company produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data: Rounded Edge Squared Edge Total Direct materials $19,000 $43,200 $62,200 Direct labor 12,200 23,800 36,000 Overhead (300% of direct labor cost) 36,600 71,400 108,000 Total cost $67,800 $138,400 $206,200 Quantity produced 10,500 ft. 14,100 ft. Average cost per ft $6.46 $9.82 -------------------------------------------------------------------------------- Northwest's controller wishes to apply activity-based costing (ABC) to allocate the $108,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information: Overhead Cost Category (Activity Cost Pool) Cost Supervision $5,400 Depreciation of machinery 56,600 Assembly line preparation 46,000 Total overhead $108,000 -------------------------------------------------------------------------------- She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines: Usage Overhead Cost Category (Activity Cost Pool) Driver Rounded Edge Squared Edge Total Supervision Direct labor cost ($) $12,200 $23,800 $36,000 Depreciation of machinery Machine hours 500 hours 1500 hours 2,000 hours Assembly line preparation Setups (number) 40 times 210 times 250 times -------------------------------------------------------------------------------- Required: 1. Assign these three overhead cost pools to each of the two products using ABC. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.) Product Assigned Cost Rounded Edge glass $ Squared Edge glass $ --------------------------------------------------------------------------------


Paper#7474 | Written in 18-Jul-2015

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