Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.
| Production Activity | Indirect Labor | Indirect Materials | Other Overhead | |||||||||
| Grinding | $ | 350,000 | ||||||||||
| Polishing | $ | 145,000 | ||||||||||
| Product modification | 500,000 | |||||||||||
| Providing power | $ | 225,000 | ||||||||||
| System calibration | 460,000 | |||||||||||
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| Additional information on the drivers for its production activities follows. |
| Grinding | 19,000 | machine hours |
| Polishing | 19,000 | machine hours |
| Product modification | 2,000 | engineering hours |
| Providing power | 17,000 | direct labor hours |
| System calibration | 950 | batches |
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| Required: | |
| 1. | Classify each activity as unit level, batch level, product level, or facility level. |
| Grinding | (Click to select) Unit level Product level Facility level Batch level |
| Polishing | (Click to select) Product level Facility level Unit level Batch level |
| Product modification | (Click to select) Batch level Product level Unit level Facility level |
| Providing power | (Click to select) Product level Facility level Batch level Unit level |
| System calibration | (Click to select) Facility level Unit level Product level Batch level |
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Answer choices for above question…… unit level batch level facility level product level
| 2. |
Compute the activity overhead rates using ABC. Form cost pools as appropriate. (Round your answers to 2 decimal places. Omit the “$” sign in your response.) |
| Grinding & Polishing | $ | per MH |
| Product modification | $ | per Eng. Hr. |
| Providing power | $ | per DLH |
| System calibration | $ | per batch |
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| Job 3175 | Job 4286 | |||
| Number of units | 150 | units | 1,875 | units |
| Machine hours | 300 | MH | 3,000 | MH |
| Engineering hours | 33 | eng hours | 32 | eng. hours |
| Batches | 10 | batches | 30 | batches |
| Direct labor hours | 450 | DLH | 4,050 | DLH |
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| 3. |
Determine overhead costs to assign to the following jobs using ABC. (Use the rates calculated in Part 2 and then round your intermediate calculations and your final answers to the nearest whole number. Omit the “$” sign in your response.) |
| Job 3175 | Job 4286 | |
| Total cost of job | $ | $ |
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| 4. |
What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286? (Use the total job cost in Part 3 and then round your final answers to 2 decimal places. Omit the “$” sign in your response.) |
| Job 3175 | Job 4286 | |
| Average overhead cost per unit | $ | $ |
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| 5. |
Assume if the company used a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286? (Round your cost per DLH to 2 decimal places, intermediate calculations to the nearest dollar amount and final answers to 2 decimal places. Omit the “$” sign in your response.) |
| Job 3175 | Job 4286 | |
| Average overhead cost per unit | $ | $ |
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