Midtown Inc. uses an activity based costing system contains the following six activity cost pools:
|
Activity Cost Pool |
Estimated Overhead Costs |
Estimated Activity |
|
|
Indirect Labor |
$ 1,100,000 |
100,000 |
Direct Labor Hours |
|
Machine processing |
120,000 |
40,000 |
Machine Hours |
|
Machine setups |
675,000 |
15,000 |
Setups |
|
Production orders |
1,350,000 |
9,000 |
Orders |
|
Shipments |
1,470,000 |
12,250 |
Shipments |
|
Product Testing |
405,000 |
450 |
Products |
|
Total: |
$ 5,120,000 |
Activity data have been supplied for the following two jobs:
|
JOB 485 |
JOB 486 |
|
|
Number of units produced |
400 |
950 |
|
Direct Labor Hours |
850 |
700 |
|
Machine Hours |
1,475 |
1300 |
|
Setups |
5 |
2 |
|
Orders |
8 |
3 |
|
Shipments |
14 |
1 |
|
Products |
2 |
2 |
Required:
- Calculate the activity rates for each of the pools.
- Determine the amount of overhead to be allocated to each job.
- Calculate the amount of overhead per unit produced.
