C O eztomheducationcomhmtpx Apps Bookmarks 6 Gable Company u

C O ezto.mheducation.com/hm.tpx Apps Bookmarks 6. Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows Activity Cost Pools Machining Designing costs Setup costs Total Cost of Pool $183,300 47,725 71,150 Cost Driver Number of machine hours Number of design hours Number of batches 61,100 5,750 500 Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows: Number of machine hours Number of design hours Number of batches Product A Product B Product C 9,100 1,350 2,100 260 21,000 2,300 60 31,000 180 Required Using activity rates, determine the amount of overhead assigned to each product. (Round activity rates to 2 decimal pla intermediate calculations and final answer to the nearest whole dollar amount.) Product A Product B Product C 4

Solution

BASIC CALCULATION:

ACTIVITY COST POOLS

(A)

TOTAL COST OF POOL

(B)

COST DRIVER

    

(C)

ESTIMATED COST DRIVER

(D)

COST PER HOUR/BATCH

    (B/D)

CALCULATION OF TOTAL OVERHEAD ASSIGNED TO EACH PRODUCT:

MACHINING

63000

(21000*3)

93000

(31000*3)

27300

(9100*3)

19090

(2300*8.3)

11205

(1350*8.3)

17430

(2100*8.3)

8538

(60*142.3)

25614

(180*142.3)

36998

(260*142.3)

FINAL ANS:

ACTIVITY COST POOLS (A)	TOTAL COST OF POOL (B)	COST DRIVER      (C)	ESTIMATED COST DRIVER (D)	COST PER HOUR/BATCH     (B/D)
MACHINING	183300	NO. OF MACHINE HOURS	61100	3
DESIGNING COSTS	47725	NO. OF DESIGN HOURS	5750	8.3
SETUP COSTS	71150	NO. OF BATCHES	500	142.3