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Activity Cost Rates
Noir Company produces four versions of its model J17-21 bicycle seat. The four versions have different shapes, but their processing operations and production costs are identical. During July, these costs were incurred:
|
Direct materials |
|
|
Leather |
$25,430 |
|
Metal frame |
39,180 |
|
Bolts |
3,010 |
|
Materials handling |
|
|
Labor |
8,232 |
|
Equipment depreciation |
4,410 |
|
Electrical power |
2,460 |
|
Maintenance |
5,184 |
|
Assembly |
|
|
Direct labor |
|
|
Engineering design |
4,116 |
|
Labor |
1,176 |
|
Electrical power |
7,644 |
|
Engineering overhead |
|
|
Overhead |
|
|
Equipment depreciation |
7,056 |
|
Indirect labor |
30,870 |
|
Supervision |
17,640 |
|
Operating supplies |
4,410 |
|
Electrical power |
10,584 |
|
Repairs and maintenance |
21,168 |
|
Building occupancy overhead |
52,920 |
July’s output totaled 29,400 units. Each unit requires three machine hours of effort. Materials handling costs are allocated to the products based on direct materials cost, engineering design costs are allocated based on units produced, and overhead is allocated based on machine hours. Assembly costs are allocated based on direct labor hours, which are estimated at 882 for July.
During July, Noir Company completed 520 bicycle seats for Job 142. The activity usage for Job 142 was as follows: direct materials, $1,150; direct labor hours, 15.
Required
1.Compute the following activity cost rates: (a) materials handling cost rate; (b) assembly cost rate, (c) engineering design cost rate, and (d) overhead rate.
2. Prepare a bill of activities for Job 142.
3. Use activity-based costing to compute the job’s total cost and product unit cost.
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