Turquoise Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Turquoise identified three overhead activities and related drivers. Budgeted information for the year is as follows:
Activity Cost Driver Amount of Driver
Engineering design $150,000 Engineering hours 5,000
Purchasing 120,000 Number of parts 10,000
Other overhead 225,000 Direct labor hours 25,000
Turquoise worked on four jobs in May. Data are as follows:
Job 10 Job 11 Job 12 Job 13
Balance, 5/1 $35,000 $42,850 $30,090 $ 0
Direct materials $29,000 $39,000 $27,550 $12,000
Direct labor $41,000 $39,500 $44,000 $21,900
Engineering hours 25 15 20 120
Number of parts 175 200 250 600
Direct labor hours 2,600 2,500 2,700 1,500
Considering the information given, the activity rates for each of the three overhead activities are
$25 per engineering hour, $11 per part, and $8 per direct labor hour.
$30 per engineering hour, $12 per part, and $9 per direct labor hour.
$28 per engineering hour, $13 per part, and $11 per direct labor hour.
$27 per engineering hour, $10 per part, and $10 per direct labor hour.