Cost Estimation Review
Essay by uuusakura • April 8, 2016 • Study Guide • 431 Words (2 Pages) • 891 Views
Activity-based costing: Building bids
Data from the previous year:
HR $40,000
IT 60,000
Maintenance 12,000
Setup costs 30,000
Factory overhead 120,000
Total 262,000
During the year, the firm had 8,000 employees, 1,200 computers, 1,000 production runs, and recorded 3,000 direct labor hours.
To allocate overhead, HR uses employees, IT uses computers, Setup Costs use production runs, and maintenance and factory overhead are allocated based on direct labor hours.
Job 15 is expected to use 20 employees, 15 computers, 10 production runs and 200 direct labor hours.
How much overhead should be allocated to Job 15 using activity-based costing?
ANSWER:
Rates: HR: 40,000 / 8,000 = $5.00 per employee
IT: 60,000 / 1,200 = 50.00 per computer
Setups: 30,000 / 1,000 = 30.00 per run
Maint and FOH: 132,000 / 3,000 = 44.00 per DLH
Application: HR: 5.00 x 20 = $100.00
IT: 50.00 x 15 = 750.00
Setups: 30.00 x 10 = 300.00
Maint & FOH: 44.00 x 200 = 8,800.00
Total overhead allocated to Job 15: $9,950.00
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