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# Activity Based Costing and Overhead Costs

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The controller for Tulsa Photographic Supply Company has established the following activity cost pools and cost drivers.

Activity Cost Pool Budgeted
Cost Cost Driver Budgeted Level
for Cost
Driver Pool Rate
Machine setups \$ 250,000 Number of setups 125 \$ 2,000 per setup
Material handling 75,000 Weight of raw material 37,500 Ib. \$ 2 per pound
Hazardous waste
control 25,000 Weight of hazardous
chemicals used 5,000 Ib. \$ 5 per pound
Quality control 75,000 Number of inspection 1,000 \$ 75 per inspection
Other overhead costs 200,000 Machine hours 20,000 \$ 10 per machine hour

Total \$ 625,000

An order for 1,000 boxes of film development chemicals has the following production requirements.

Machine setups 5 setups
Raw material 10,000 pounds
Hazardous materials 2,000 pounds
Inspections 10 inspections
Machine hours 500 machine hours

Required:
1.
Compute the total overhead that should be assigned to the development-chemical order.

2.

3.
Suppose Tulsa Photographic Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour.

Overhead rate \$ per machine hr

4.
Suppose Tulsa Photographic Supply Company were to use a single predetermined overhead rate based on machine hours, how much overhead would be assigned to the development-chemical order?

a. In total. (Do not round your intermediate calculations.

b.

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The controller for Tulsa Photographic Supply Company has established the following activity cost pools and cost drivers.Â

Activity Cost Driver Overhead Cost Cost Driver Budgeted Level for Pool Budgeted Pool cost Rate
Machine Setup \$250,000 No of setups 125 \$2,000 per setup
Material Handling \$75,000 Weight of raw material 37500 \$2 per pound
Hazardous waste Control \$25,000 Weight of hazardous chemical used 5000 \$5 per pound
Quality ...

#### Solution Summary

This solution provides a complete computation of the given accounting problem formatted in Excel.

\$2.49