Problem
Bibing Kah Ltd has estimated that they will incur $285,050 overhead cost next year. The company uses activity based costing to allocate OVH to each job. Here is the breakdown per activity:
|
Activities
|
Estimated MOH
|
Estimated Bases
|
Allocation Base
|
|
Procurement
|
$ 300.00
|
10 PO
|
# of purchase orders
|
|
Machine setup
|
$ 7,000.00
|
35 Setups
|
# of setups
|
|
Insertion of parts
|
$ 112,000.00
|
4,000 parts
|
# of parts
|
|
Finishing
|
$ 150,000.00
|
2,500 DL hours
|
# of finished DL hours
|
|
Shipments
|
$ 15,000.00
|
10 shipments
|
# of shipments
|
|
Invoicing
|
$ 750.00
|
10 Invoices
|
# of completed invoices
|
|
Total
|
$ 285,050.00
|
|
|
Calculate the pre determined rate for each activity.