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Brief Exercise 4-12 Spin Cycle Architecture uses three activity pools to apply overhead to its projects
Brief Exercise 4-12
Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $47,760; design $286,000; and construction oversight $121,900. The cost drivers and estimated use are as follows.
|
Activities |
Cost Drivers |
Estimated Use of Cost |
||
| Initial concept formation | Number of project changes | 24 | ||
| Design | Square feet | 143,000 | ||
| Construction oversight | Number of months | 115 |
(a) Compute the predetermined overhead rate for each activity.
(b) Classify each of these activities as unit-level, batch-level, product-level, or facility-level.
Expert Solution
(a)
| Initial concept formation |
$47,760
|
= | $1,990 per project change | |
|
24
|
||||
| Design |
$286,000
|
= | $2 per square foot | |
|
143,000
|
||||
| Construction oversight |
$121,900
|
= | $1,060 per month | |
|
115
|
(a) Compute the predetermined overhead rate for each activity.
|
Overhead Rate |
|||
| Initial concept formation | $
|
per project change | |
| Design | $
|
per square foot | |
| Construction oversight | $
|
Per month | |
(b) Classify each of these activities as unit-level, batch-level, product-level, or facility-level.
|
Activities |
Level |
|
| Initial concept formation |
|
|
| Design |
|
|
| Construction oversight |
|
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