Assume that manufacturing overhead for Glassman Company in the previous exercise consisted of the
following activities and costs:
Setup (1,000 setup hours) ………………… $144,000
Production scheduling (400 batches)…………. 60,000
Production engineering (60 change orders) …….. 120,000
Supervision (2,000 direct labor hours) ………… 56,000
Machine maintenance (12,000 machine hours) ….. 84,000
Total activity costs ……………………. $464,000
The following additional data were provided for Job 845:
Direct materials costs…………………….. $7,000
Direct labor cost (5 Milling direct labor hours;
35 Finishing direct labor hours) ……………. $1,000
Setup hours …………………………… 5 hours
Production scheduling ……………………. 1 batch
Machine hours used (25 Milling machine hours;
5 Finishing machine hours)……………….. 30 hours
Production engineering …………………… 3 change orders
a. Calculate the cost per unit of activity driver for each activity cost category.
b. Calculate the cost of Job 845 using ABC to assign the overhead costs.
c. Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours calculated
in the previous exercise.
d. Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling
Department and a direct labor hour overhead rate for the Finishing Department
Milling Department manufacturing overhead………………………….$344,000
Finishing Department manufacturing overhead ………………………..$120,000
Machine hours used
Milling Department ………………………………………….10,000 hours
Finishing Department ………………………………………..2,000 hours
Labor hours used
Milling Department ………………………………………….1,000 hours
Finishing Department ………………………………………..1,000 hour
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