Question

Student Name:_____________________________________
Activity-Based Costing	Requirements:		FILL IN THE ….	"Blanks"
MOH costs:	Rent, Utilities,Insurance……………………………………………………………………………				$ 600,000
	Quality control person assigned to batchruns…………………				36,000
	Machine maintenance cost………………………………………………..				70,000
	IndirectMaterials……………………………………………………………………………….				44,000
	Indirect Labor:Supervisors……………………………………………………………..				30,000
					$ 780,000
Other data:	Couches	Chairs	Ottomans	Totals
Number of machine hours	430	225	45	700	Machine hrs
Number of batch runs	260	180	60	500	Batch runs
Number of designs	9	4	2	15	designs
Sq ft of plant occupancy	40,000	18,000	2,000	60,000	Sq ft of Plant
Number of units made	3,000	1,800	1,200	6,000	units
Sq ft of leather (DM) used	72,000	25,000	3,000	100,000	sq ft of leather
Requirement #1: Allocate MOHutilizing DL$				MOH ratio	MOH allocation rate
Calculate the Predetermined MOH allocation rate using DL$ as thecost driver…..use the cells to the right for your calculations.After determining the MOH allocation rate, allocate MOH to allthree products below. Fill-in all blank cells.
Costs:	Couches	Chairs	Ottomans	Totals
Direct Materials	$ 116,000	$ 48,000	$ 12,000	$ 176,000
Direct Labor	151,000	123,400	115,600	390,000
Allocate MOH in these cells
Total Inventoriable Costs
Total Cost per unit (rounded)
Requirement #2: Allocate MOHwith Activity Based Costing.
ABC allocation information:
MOH Cost category	Activity Base Selected		Activity Measure
Rent, Utilities, Insurance
Quality control person
Machine maintenance cost
Indirect Materials
Indirect Labor: Supervisors
Calculate Activity Base CostDrivers: Fill-in the blanks.
	Cost category		MOH ratio	MOH allocation rate
	Rent, Utilities, Insurance
	Quality control person
	Machine maintenance cost
	Indirect Materials
	Indirect Labor: Supervisors
Update cost data	Couches	Chairs	Ottomans	Totals
Direct Materials	$ 116,000	$ 48,000	$ 12,000	$ 176,000
Direct Labor	151,000	123,400	115,600	390,000
Rent, Utilities, Insurance
Quality control person
Machine maintenance cost
Indirect Materials
Indirect Labor: Supervisors
Total Inventoriable Costs
Total Cost per unit
Requirement #3: Total CostComparison
Summarize your Total Cost per unit from Requirement 1 & 2.Assuming the company is a price setter, calculate the price perunit for both applications in order to achieve a 40% gross marginratio per product line.
		Couches	Chairs	Ottomans
Total Cost per unit utilizingDL$ (Req1)
Price per unit to achieve 40%gross margin
Total Cost per unit withABC
Price per unit to achieve 40%gross margin