Solution-Find out the amount of cost assigned to receiving

Find out the amount of cost assigned to receiving activity

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Reference no: EM131721759

Question - Cummings Company has identified the following overhead activities costs and activity drivers for the coming year:

Activity	Expected cost	Activity Driver	Activity Capacity
Setting up	$120,000	Number of setups	600
Inspecting	$ 90,000	Inspection hours	9,000
Grinding	$180,000	Machine hours	36,000
Receiving	?	Number of parts	100,000

The company produces several different subassemblies used by other manufacturers. Information on separate batches for two of these subassemblies follows:

	F	G
Direct Materials	$ 1,700	$1,900
Direct Labour	$ 1,200	$ 1,200
Units Completed	200	100
Number of setups	2	2
Inspection hours	8	4
Machine hours	40	60
Parts used	40	80

The company's normal activity is 20,000 direct labour hours. Each batch uses 100 hours of direct labour. Upon investigation, you discover that Receiving employs a worker, who spends 75% of her time on the receiving activity and 25% of her time on inspecting products. Her salary is $80,000. Receiving also uses a forklift, at a cost of $12,000 per year for amortization and fuel. The forklift is used only in receiving.

How would you...

a) Find out the amount of cost assigned to the receiving activity?

b) Find the activity rate for receiving?

Reference no: EM131721759

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Find out the amount of cost assigned to receiving activity

Reference no: EM131721759

Reference no: EM131721759

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