Ques IThe following information applies to the questions displayed below Craft P

Question

Ques IThe following information applies to the questions displayed below Craft Pro Machining produces machine tools for the construction industry. The following detalils about overhead costs were taken from its company records Indirect Mateals Other Overhead Production Activity Grinding Polishing Product modification Providing power System callbration Indirect Labor S 330,000 600,000 530,000 $ 130,000 240,000 Additional Information on the drivers for its production activities follows. Grinding Polishing Product modification Providing power System callbration 15,000 machine hours 15,000 machine hours 2,000 engineering hours 16,000 direct labor hours 900 batches Job 3175 Job 4286 210 Number of units Machine hours Engineering hours units 2,625 units 450 MH 4,500 MH 34 eng hours 5 batches 28 eng.hours 15 batches Batches 4,050 Direct labor hours 450 DLH DLH

Explanation / Answer

1 ABC system Estimated cost Cost driver Cost per driver Grinding 330000 15000 22 Polishing 130000 15000 8.67 Product modification 600000 2000 300 Providing power 240000 16000 15 System calibration 530000 900 588.89 1830000 ABC system Cost driver Job 3175 Job 4286 Total Grinding 22 9900 99000 108900 Polishing 8.67 3900 39000 42900 Product modification 300.00 10200 8400 18600 Providing power 15.00 6750 60750 67500 System calibration 588.89 2944.44 8833.33 11777.78 Total overheads 33694.44 215983.33 249677.78 Number of units 210 2625 Cost per unit 160.45 82.28

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