Check my work Northwest Company produces two types of glass

Check my work Northwest Company 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. (Round activity rate and cost per foot answers to 2 declmal places) Direct material Direct labor Overhead (3008 of direct labor cost) Total cost s 9,300 ,100 $21,600 30,900 18,000 35,70054 000 11,900 18, 300 $33,700 69,200 $102,900 Quantity produced Average cost per ft. (rounded) 4,100 ft. $4.91 10.400 ft. $ 3.24 Northwest\'s controller wishes to apply activity-based costing (ABC) to allocate the $54,000 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)Ilcont Supervision Depreciation of machinery Assembly line preparation Total overhead s 2.160 8.840 23 000 $54,000

Solution

1. Assign these three overhead cost pools to each of the two products using ABC. Activity Overhead Cost Activity Drivers Activity Rate Supervision $2,160 $18,000 Direct labor cost 12.00% of direct labor cost Depreciation of machinery 28,840 1,000 Machine hours $28.84 per machine hour Assembly line preparation 23,000 125 Setups $184.00 per setup Rounded edge Activity rate Activity driver incurred Overhead assigned Supervision 12.00% of direct labor cost 6100 $                       732 Depreciation of machinery $28.84 per machine hour 300                        8,652 Assembly line preparation $184.00 per setup 30                        5,520 Squared edge Activity rate Activity driver incurred Overhead assigned Components Supervision 12.00% of direct labor cost 11900 $                    1,428 Depreciation of machinery $28.84 per machine hour 700                      20,188 Assembly line preparation $184.00 per setup 95                      17,480 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge Direct materials $9,300 $21,600 Direct labor                  6,100               11,900 Total overhead cost(ABC)                14,904               39,096 Total manufacturing cost $30,304 $72,596 Total production(feet)                10,400               14,100 Average cost per feet $                2.91 $               5.15