Haskell Hardwood Floors installs oak and other hardwood floors in homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
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Production overhead.........
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$120,000
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Office expense..................
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140,000
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Total..................................
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$260,000
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Distribution of resource consumption:
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Installing
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Job
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Activity Cost Pools
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Floors
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Support
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Other
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Total
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Production overhead.........
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55%
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25%
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20%
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100%
|
|
|
Office expense..................
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20%
|
50%
|
30%
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100%
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The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The amount of activity for the year is as follows:
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Activity Cost Pool
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Annual Activity
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Installing floors......
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800 squares
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Job support.............
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100 jobs
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Other......................
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Not applicable
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A "square" is a measure of area that is roughly equivalent to 1,000 square feet.
Required:
a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
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Installing
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Job
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Floors
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Support
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Other
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Total
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Production overhead..........
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|
|
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Office expense...................
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Total...................................
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b.Compute the activity rates for the Installing Floors and Job Support activity cost pools by filling in the table below:
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Installing
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Job
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Floors
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Support
|
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Production overhead..........
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|
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Office expense...................
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|
|
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Total...................................
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c. Compute the overhead cost, according to the activity-based costing system, of a job that involves installing 3.2 squares.