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Glassworks Inc

Accounting

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Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (300% of direct labor cost) Total cost Quantity produced Average cost per ft. (rounded) Rounded Edge $ 9,400 6,100 18,300 $33,800 10,400 ft. $ 3.25 Squared Edge Total $21,600 $ 31,000 12,000 18,100 36,000 54,300 $69,600 $ 103,400 14,100 ft. $ 4.94 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,300 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Cost Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead $ 2,172 29,000 23, 128 $ 54,300 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Usage Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Direct labor cost ($) Machine hours Setups (number) Rounded Edge $6,100 200 hours 32 times Squared Edge $12,000 700 hours 94 times Total $18,100 900 hours 126 times Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Overhead Cost Activity Drivers Activity Rate Direct labor cost % Activity Supervision Depreciation of machinery Assembly line preparation Machine hours Setups Rounded edge Activity rate Activity driver incurred Overhead assigned Supervision 1% 0
Activity Rate Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Activity Overhead Cost Activity Drivers Supervision Direct labor cost Depreciation of machinery Machine hours Assembly line preparation Setups Rounded edge Activity rate Supervision % 0 Depreciation of machinery Assembly line preparation 0 Activity driver incurred Overhead assigned Squared edge Activity rate Activity driver incurred Overhead assigned % 0 Components Supervision Depreciation of machinery Assembly line preparation 0 0 2. Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge