Chapter 19: Q42PGB_1 (page 1081)

Rennie Plant Service completed a special landscaping job for Brenton Company. rennie 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 Rennie job included $1,500 in plants; $800 in direct labor; one design; and 30 plants.
Requirements
1. What is the total cost of the Brenton job?

Expert verified

Total cost of Brenton job: $1,690

Step by step solution

$Design cost = No . of designs \times Predetermined over head allocation rate = 1 \times $ 290 = $ 290$

role="math" localid="1653289750404" $Planting cost = No . of plants \times Predetermined overhead allocation rate = 30 \times $ 20 = $ 600$

role="math" localid="1653289898905" $Total overhead cost = Design cost + Planting cost = $ 290 + $ 600 = $ 890$

$Total cost = Direct labor cost + Total overhead cost = $ 800 + $ 890 = $ 1, 690$

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Activity	Budgeted Cost of Activity	Allocation Base	Predetermined Overhead Allocation Rate

Materials handling	\( 230,000	Number of parts	\)1.50
Assembly	3,200,000	Number of assembling direct labor hours	16.00
Finishing	150,000	Number of finished units*	3.00

Product	Total Units Produced	Total Direct materials Costs	Total Direct Labor Costs	Total Number of Parts	Total Assembling Direct Labor Hours

Standard bookcase	3,000	\(54,000	\)67,500	9,000	4,500
Unfinished bookcase	3,500	56,000	52,500	7,000	3,500