Jared Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system.
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Activity Cost Pool
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Activity Measure
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Annual Activity
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Painting overhead..............
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Square meters
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10,000
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square meters
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|
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Job support.........................
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Jobs
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200
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jobs
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|
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Other..................................
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None
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Not
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applicable
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The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below:
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Job
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|
|
|
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Painting
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Support
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Other
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Total
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|
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Painting overhead.....
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$ 99,000
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$ 45,000
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$36,000
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$180,000
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|
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Office expense..........
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6,000
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78,000
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36,000
|
120,000
|
|
|
Total..........................
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$105,000
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$123,000
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$72,000
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$300,000
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Required:
a. Compute the activity rates for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent.
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Job
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Painting
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Support
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Painting overhead.....
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|
|
|
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Office expense..........
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|
|
|
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Total..........................
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b. Prepare an action analysis report in good form of a job that involves painting 71 square meters and has direct materials and direct labor cost of $2,410. The sales revenue from this job is $3,800.
For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; painting overhead as a Red cost; and office expense as a Yellow cost.