Solved

Huish Awnings Makes Custom Awnings for Homes and Businesses Distribution of Resource Consumption

Question 103

Essay

Huish Awnings makes custom awnings for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools:
Overhead Costs:
 Production overhead $150,000 Office expense 100,000 Total $250,000\begin{array} { | l | r | } \hline \text { Production overhead } & \$ 150,000 \\\hline \text { Office expense } & 100,000 \\\hline \text { Total } & \$ 250,000 \\\hline\end{array}
Distribution of resource consumption:
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad  Activity Cost Pools \text { Activity Cost Pools }
 Making  Awnings  Job Support  Other  Total  Production overhead 45%40%15%/%100% Office expenses 8%65%27%100%\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { r } \text { Making } \\\text { Awnings }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \text { Production overhead } & 45 \% & 40 \% & 15 \% / \% & 100 \% \\\hline \text { Office expenses } & 8 \% & 65 \% & 27 \% & 100 \% \\\hline\end{array}
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
 Activity Cost Pool  Annual Activity  Making awnirgs 5,000 metres  Job support 200 jobs  Other  Not applicable \begin{array} { | l | r | } \hline \text { Activity Cost Pool } & \text { Annual Activity } \\\hline \text { Making awnirgs } & 5,000 \text { metres } \\\hline \text { Job support } & 200 \text { jobs } \\\hline \text { Other } & \text { Not applicable } \\\hline\end{array}
Required:
a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
 Making  Awnings  Job Support  Other  Total  Production  overhead  Office expense  Total \begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Making } \\\text { Awnings }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Production } \\\text { overhead }\end{array} & & & & \\\hline \text { Office expense } & & & & \\\hline \text { Total } & & & & \\\hline\end{array}
b)Compute the activity rates (i.e.,cost per unit of activity)for the Making Awnings and Job Support activity cost pools by filling in the table below:
 Making Awnings  Job Support  Production overhead  Office expense  Total \begin{array} { | l | l | l | } \hline & \text { Making Awnings } & \text { Job Support } \\\hline \text { Production overhead } & & \\\hline \text { Office expense } & & \\\hline \text { Total } & & \\\hline\end{array}
c)Prepare a report in good form of a job that involves making 80 yards of awnings and has direct materials and direct labour cost of $3,000.The sales revenue from this job is $4,000.

Correct Answer:

verifed

Verified

a)First-stage allocation
\[\begin{array ...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents