Caccting

Activity "Budg.

O/Head" Cost Drivers Cost Quantity "Allocation

Rate"

Maintenance $70,000 Machine Hours 16,000 $4.38

Materials Handling 30,000 Materials Move 4,000 7.5

Setups 25,000 Setups 2,000 12.5

Inspection 50,000 Quality Inspections 8,000 6.25

Total Overhead $175,000 30,000

Required:

"A. Determine the amount of overhead that would be allocated to the proposed job if direct labor hours

are used as the volume-based activity driver."

"Bud. Manufacturing

Overhead Rate =" "175000

O. Costs" = "$3.5 per

machine hour"

"50000

LB Hours"

B. Determine the total cost of the proposed job.

$30,000 X 3.5= $105,000 + $6,250.00 = $111,250.00

C. Determine the company's bid if the bid is based upon full manufacturing cost plus 30 percent.

$30,000 X 3.5= $105,000 + 30% = $136,500.00

"D. Determine the amount of overhead that would be applied to the proposed project if

activity-based costing is used."

$6,250 X 3.5= $21,875

E. Determine the total cost of the proposed job if activity-based costing is used.

$30,000 X 3.5= $105,000 + $6,250.00 = $111,250.00

"F. Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing

cost plus 30 percent."

$111,250 X 30%= $144,625

"G. Which Product costing method produces the more competitive bid? Explain the diferrences between

how activity base costing systems can provide more accurate product costs than traditional cost systems."

The ABC systems produces more competitive bid.

"The ABC focuses on...