Compute the pool rates for the different activities
Course:- Managerial Accounting
Reference No.:- EM13449

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

1.      Ernest, Inc. has identified the following overhead costs and cost drivers for next year:
Overhead Item    Expected Cost                  Cost Driver          Quantity Activity rate
Setup costs              $320,000 Number of setups 4,000  
Ordering costs           120,000 Number of orders 15,000  
Maintenance 480,000 Machine hours 125,000  
Power 40,000 Kilowatt hours 200,000  
Total overhead        $960,000      

The following are two of the jobs completed during the year:

  Job 320 Job 321

Direct materials  $                19,200  $                      24,000
Overhead costs
Direct labor  $                24,000  $                      30,000   Job 320  Job 321 
      Setup costs                 
Units completed                      1,600                             2,000 Ordering costs              
Number of setups                                   12                                   10 Power    
Number of orders                                   20                                   30 Total                               -                         -  
Machine hours                                400                                600

Kilowatt hours                                280                                350


1.   Complete the schedule above to compute the pool rates for the different activities.
2a.  Compute the total job costs assigned to the each of the two jobs using the information provided.  Assign overhead using the pool rates calculated in "a" above.  
  Job 320 Job 321

Direct materials    

Direct labor    

Overhead costs    

Total costs assigned    

2b.  Compute the unit cost for the two jobs.

Total Costs Assigned                                    -                                      -  

Number of Units                             1,600                             2,000

Cost Per Unit  $                               -    $                               -  


3.  Assume instead of using ABC costing, the company used a traditional costing method that assigns overhead using a predetermined rate based on machine hours.  Based on the original numbers, total overhead for the year is $960,000 and the total estimated machine hours are 125,000.
a.  Compute the predetermined rate using the information in item 3.



b.  Compute the total cost assigned to jobs 320 and 321 by substituting the traditional overhead for the ABC overhead that you computed in 2 above
Overhead assigned Hours Rate Total

 Job 320                                 400    

 Job 321                                 600    

   Job 320   Job 321 

 Direct materials     

 Direct labor     

Overhead costs    

Total costs assigned                                    -                                      -  

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
You've been appointed as an executive director of small nonprofit organization. Among your many duties are to estimate an annual budget and develop a fiscal plan for organiz
Assume that Goodrich Petroleum Corporation is evaluating a capital expenditure proposal that has the following predicted cash flows: Required - Using a discount rate of 12 pe
Use a selected company or your current work environment to identify at least one cost or expense that would fit under each of the following categories:  .Variable .Fixed .Mix
Based on the numbers from your Individual Project, do you feel that the manager of S&J Plumbing, Incorporated has delivered a good profit margin? Support your argument?
George Ltd manufactures two types of coils used in electric motors. The two types are: C20 and D40. They both require plastic and metal. Information for the two products for t
What is the acid-test ratio for the current year? What is the inventory turnover for the current year? What are days' sales in receivables for the current year? What is the bo
Calculate the companys current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United State
Journalize each transaction. Explanations are not required - post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts