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Action Analysis Report

Jantho Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system.
Activity Cost Pool Activity Measure Annual Activity
Painting overhead Square meters 10,000 square meters
Job support Jobs 240 jobs
Other None Not applicable
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below:
Painting Job
Support Other Total
Painting overhead $ 99,000 $ 45,000 $36,000 $180,000
Office expense 14,000 84,000 42,000 140,000
Total $113,000 $129,000 $78,000 $320,000
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent.
Painting Job
Support Other Total
Production overhead
Office expenses
Total
b. Prepare an action analysis report in good form of a job that involves painting 98 square meters and has direct materials and direct labor cost of $2,580. The sales revenue from this job is $3,700.

For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; painting overhead as a Red cost; and office expense as a Yellow cost.

Solution Summary

The solution explains how to prepare an action analysis report.

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