Question

Huish Awnings makes custom awnings for homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity cost pools Overhead Costs: Production overhead Office expense Total $150,000 100,000 $250,000 Distribution of resource consumption Activity Cost Pools MakingJob Support Other Total Awnings 45% Production overhead Office expenses 40% 15% 100% 8% 6590 2700 100% The amount of activity for the year is as follows Activity Cost Pool Making awnings Job support Other Annual Activity 5,000 metres 200 jobs Not applicable Required: a) Prepare the first-stage allocation of overhead costs to the activity cost pools b) Compute the activity rates for the Making Awnings and Job Support activity cost pools c) Calculate the overhead cost of a job# 452F that involves making 80 yards of awnings d) Prepare a report that determines the margin ofjob# 452F which has direct materials and direct labour cost of $3,000 and sales revenue from of $4,000

Answer 1

a

First stage allocation of overhead costs to the activity cost pools

Making Awnings Job Support Other Total

Production Overhead 67500 60000 22500 150000

Office Expenses 8000 65000 27000 100000

b

Activity rates (cost per unit of activity)

Making Awnings Job Support

Production Overhead (Cost/annual activity) 13.5 300

Office Expenses (8000/5000)(65000/200) 1.6 325

Find attachments for c and d part.