Glassworks Inc produces two types of glass shelving rounded

Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data Rounded Edge Squared Edge Total $ 9,600 6,200 18,600 $21,700 12,000 36,000 31,300 Direct materials Direct labor Overhead (300% of direct labor cost) 18,200 54,600 Total cost 34,400 $ 69,700 104,100 Quantity produced Average cost per ft. (rounded) 10,400 ft. $ 3.31 14,000 ft. $ 4.98 Glassworks\'s controller wishes to apply activity-based costing (ABC) to allocate the $54,600 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Cost $ 2,184 29,160 23,256 Total overhead $ 54,600 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total Driver Rounded Edge Squared Edge Direct labor cost ($) 6,200 Machine hours Setups (number) $12,000 $18,200 200 hours 31 times 700 hours 95 times 900 hours 126 times

Solution

Given Information:-

Overhead cost as per Traditional Costing System

Product - Glass shelving(Rounded Edge) = $18,600

   Product - Glass shelving(Squared Edge) = $36,000

Part-1(answer)

Statement Showing assigning Overhead cost pools to each of the two products:-

OH Cost Category OH COST Prod. - Rounded edge Prod. - Squared edge

Driver Pool

1)Supervision DL cost $2,184 744(2,184*6,200/18,200) 1,440(2,184*12,000/18,200)

2)Depreciation of

machinery M Hrs $29,160 6,480(29160*200/900) 22,680(29,160*700/900)

3)Assembly line

preparation Set up\'s $23,256 5,722(23,256*31/126) 17,534(23,256*95/126)

Total $54,600 $12,946 $41,654

Part-2(answer)

statement showing average cost /foot (as per ABC):-

particulars Product-Rounded Edge Product - Squared Edge

1)DM $ 9,600 $ 21,700

2)DL 6,200 12,000

3)OH(as per ABC) 12,946 41,654

Total Cost 28,746 75,354

Qty Produced 10,400 ft 14,000 ft

Avg. cost/ft (as per ABC) $2.76 $5.38