Homework SourseHippity Hoppity Brew is a manufacturer of Small Medium and L
Hippity Hoppity Brew is a manufacturer of Small, Medium and Large size malting equipment for use in craft breweries across the United States and Canada. They are implementing an activity based cost (ABC) system and have compiled the following indirect cost information.
During the period, the Medium sized equipment line at Hippity Hoppity Brew used 650 machine hours, used 6200 square feet of floor space, received 63 orders, experienced 13 engineering changes and had 8 warranty claims. $128723 of direct labor and $73535 of direct material were charged towards the Medium sized equipment line during the year.
Under the ABC system, how much indirect cost was charged to the Medium line during the year? round your answer to the whole dollar
| Cost Pool | Estimated Cost | Cost Driver | Est Total Cost Driver |
| Equipment Maintenance | $50072 | Machine Hours | 1500 Hours |
| Production Facility Costs | $78410 | Footprint (sqft) | 20000 Square Feet |
| Order Processing Costs | $21504 | Num of Orders | 200 Orders |
| Engineering Changes | $43534 | Num of Changes | 50 Changes |
| Customer Relations | $14139 | Warranty Claims | 30 Claims |
Solution
Total Indirect Cost to be charged
| Cost Pool | Activity rate (A) | Applied on Hippity Hopitty (B) | Total cost (A)x(B) |
| Equipment manintenance | 50072/1500=33.38 | 650 | 21697 |
| Production facility costs | 78410/20000=3.92 | 6200 | 24304 |
| Order Processing cost | 21504/200=107.52 | 63 | 6774 |
| Engineering changes | 43534/50=870.68 | 13 | 11319 |
| Customer relations | 14139/30=471.3 | 8 | 3770 |
| TOTAL INDIRECT COST | 67864 |
