Assignment 1

(A)Compute the predetermined overhead rate using traditional costing with materials cost as the basis?
_ Solution:
Predetermine overhead rate: Total budgeted overhead costs
O/H rate = (Budgeted = Estimated) Materials cost budgeted (BASIS) 550,000 = = 1.1 % 500,000

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(B) What is the manufacturing cost per armoire under traditional costing?
_Solution:
Manufacturing cost overhead.
Direct materials $5,200
Direct labor $3,500
Manufac. Overhead $1.1 ----------
Manufacturing cost $8,701.1 ----------
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(C) What is the manufacturing cost per armoire under activity based costing?
_Solution:
1)
Overhead cost pools Amount Activity cost Drivers Expected use of costs drives
Purchasing $ 45,000 Number of orders 500 Handling materials 50,000 Number of moves 5,000 Production 130,000 Direct labor hours 65,000 Setting up machines 85,000