Calculating Activity-Based Costing Overhead Rates

Calculating Activity-Based Costing Overhead RatesAssume that manufacturing overhead for Glassman Company in the previous exerciseconsisted of the following activities and costs:Setup(1,000setup hours)$146,000Production Scheduling (400batches)..60,000Production Engineering (60 change orders)90,000Supervision (2,000 direct labor hours).56,000Machine Maintenance (12,000 machine hours)..96,000Total Activity Costs$460,000The following additional data were provided for Job 845:Direct MaterialsCosts$8,000Direct labor cost (5 Milling direct labor hours; 35 Finishing direct labor hours)..1000Setuphours.5 hoursProductionScheduling..1 batchMachine hours used (25 Milling machine hours;5 finishing machine hours)30 hoursProductionengineering3change ordersRequireda. Calculate the cost per unit of activity driver for each activity cost category.b. Calculate the cost of Job 845 using ABC to assign the overhead costs.c. Calculate the cost of Job 845 using the plantwide overhead rate based on machinehours calculated in the previous exercise.d. Calculate the cost of Job 845 using a machine hour departmental overhead rate forthe Milling Department and a direct labor hour overhead rate for the FinishingDepartmentData for 2014 to solve (d)Milling Department manufacturingoverhead $362,000Finishing Department manufacturingoverhead..130,000Machine hours usedMillingDepartment10,000 hoursFinishingDepartment.2,000 hoursLabor hours usedMillingDepartment.1,000 hoursFinishingDepartment.1,000 hours


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