ACCOUNTING HOMEWORK HELP

OUTSIDE ACTIVITY – ACTIVITY-BASED COSTING

YOU WANT TO DETERMINE HOW THE SALARIES YOU ARE PAYING 4 EMPLOYEES REALLY SHOULD BE ALLOCATED TO THE PRODUCTS YOUR COMPANY MANUFACTURES. ALL BUT ONE IS PAID HOURLY. HERE ARE THEIR WAGES:

JOE BOG - $10.00/HOUR – ASSEMBLES PRODUCT A

NORMA JEAN - $12.00/HOUR – MECHANIC – REPAIRS AND MAINTAINS MACHINES

BILL BLASS – $20.00/HOUR - DESIGNS PRODUCTS

SAM HILL – $3,000/MONTH -PRODUCTION SUPERVISOR

IT HAS BEEN DETERMINED THAT ALL OF JOE’S WAGES WOULD BE ALLOCATED DIRECTLY TO PRODUCT A.

NORMA WORKS ON PRODUCTION MACHINES FOR SEVERAL DIFFERENT PRODUCTS. HER WAGES SHOULD BE ESTIMATED FOR THE TOTAL YEAR AND THEN ALLOCATED TO THE PRODUCTS BASED ON HOW MANY REPAIRS HAVE TO BE DONE ON THOSE MACHINES. FOR THE UPCOMING YEAR, HER TOTAL ESTIMATE WAGES ARE $24,000, AND YOU HAVE ESTIMATED THAT SHE WILL HAVE TO MAKE 300 REPAIRS, 50 OF WHICH WILL BE DONE ON PRODUCT A MACHINERY.

BILL BLASS’S WAGES ARE ALLOCATED BY THE NUMBER OF DESIGN CHANGES HE HAS TO MAKE ON PRODUCTS. IT IS ESTIMATED THAT HE WILL EARN $40,000, AND THAT HE WILL HAVE TO MAKE ABOUT 400 DESIGN CHANGES TOTAL, 20 OF WHICH WILL BE FOR PRODUCT A.

SAM, AS PRODUCTION SUPERVISOR, HAS WAGES ALLOCATED USING DIRECT LABOR HOURS. IT IS ESTIMATED THAT THE COMPANY WILL WORK 10,000 DIRECT LABOR HOURS IN THE UPCOMING YEAR. JOE IS THE ONLY DIRECT LABOR EMPLOYEE FOR PRODUCT A.

REQUIRED: ESTIMATE THE TOTAL LABOR COST FOR PRODUCT A. USE A 50-HOUR WORKWEEK FOR HOURLY EMPLOYEES.