ACCT 2302 - Principles of accounting 2 - Chapter 17 Quiz Problem

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows.

Activity Cost Driver

Setting up machines $ 19,240 26 batches

Inspecting components $ 5,400 5,400 parts

Providing utilities $ 10,800 5,400 machine hours

Overhead has been applied to output at a rate of 55% of direct labor costs. The following data pertain to Job 6.15.

Direct materials $ 2,600 

Direct labor $ 3,100 

Batches 6 batches

Number of parts 430 parts

Machine hours 560 machine hours

Required:

1.

Classify each of its three overhead activities as unit level, batch level, product level, or facility level.

Setting up machines                                       

Inspecting components                                  

Providing utilities

2.

What is the total cost of Job 6.15 if Business Solutions applies overhead at 55% of direct labor cost? (Omit the "$" sign in your response.)

3.

What is the total cost of Job 6.15 if Business Solutions uses activity-based costing? (Omit the "$" sign in your response.)