Business, 05.05.2020 09:30 ablikids3

Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs:

- Setup (1,000 setup hours) $118,000

- Production scheduling (400 batches) 60,000

- Production engineering (60 change orders) 150,000

- Supervision (2,000 direct labor hours) 46,000

- Machine maintenance (12,000 machine hours) 60,000

- Total activity costs $434,000

The following additional data were provided for Job 845:

- Direct materials costs $7,000

- Direct labor cost (5 Milling direct labor hours; 35 Finishing direct labor hours) $1,000

- Setup hours 5 hours

- Production scheduling 1 batch

- Machine hours used (25 Milling machine hours; 5 Finishing machine hours) 30 hours

- Production engineering 3 change orders

Required:

(a) 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 plant-wide overhead rate based on machine hours.

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