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Chapter 19: Q 36PGA-1 (page 1077)

Question:Blanchette Plant Service completed a special landscaping job for Kerry Company. Blanchette uses ABC and has the following predetermined overhead allocation rates:

Activity Predetermined

Allocation Base Overhead Allocation Rate

Designing Number of designs \( 290 per design

Planting Number of plants \) 20 per plant

The Kerry job included \(750 in plants; \)1,300 in direct labor; one design; and 30 plants.

Requirements

1. What is the total cost of the Kerry job?

Short Answer

Expert verified

Answer

Total cost of Kerry job: $2,190

Step by step solution

01

Total overhead cost

Designcost=No.ofdesigns×Predeterminedallocationoverheadrate=$1×$290=$290Plantingcost=No.ofplants×Predeterminedallocationoverheadrate=$30×$20=$600Totaloverheadcost=Designcost+Planningcost=$290 +$600=$890

02

Total cost of Kerry job

Totalcost=Directlabourcost+Totaloverheadcost=$1,300 +$890=$2,190

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Most popular questions from this chapter

How is the Conversion Costs account used in JIT costing?

Explain the difference between the target price and target cost.

Refer to Exercise E19-20. For 2019, Eason’s managers have decided to use the same indirect manufacturing costs per wheel rim that they computed in 2018 using activity based n costing. In addition to the unit indirect manufacturing costs, the following data are expected for the company’s standard and deluxe models for 2019:

Standard Deluxe

Sales price \( 800.00 \) 940.00

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Direct labor 45.00 52.00

Because of limited machine hour capacity, Eason can produce either2,000 standard rims or2,000 deluxe rims.

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2. If the managers rely on the single plantwide overhead allocation rate cost data, which model will they produce?

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The Oakman Company manufactures products in two departments: Mixing and Packaging. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are $810,000, and estimated direct labor hours are 360,000. In October, the company incurred 20,000 direct labor hours.

Requirements

1. Compute the predetermined overhead allocation rate. Round to two decimal places.
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