Answer and Explanation:
Activity Overhead Cost Activity Drivers
Grinding &
Polishing $535,000 17,000 Machine hours
Product modification
per EH $400,000 1,700 Engineering hrs.
For Job 3175
Activity Activity Rate Activity driver Overhead
Grinding & incurred assigned
Polishing $31.47 per MH 300 $9,441
Product modification
per EH $235.29 per EH 29 $6,823
Providing power $15.29 per DLH 460 $7,033
System calibration $2,200 per batch 20 $44,000
Total overhead cost $67,297
No. Of units in job 120
Average overhead cost per unit $560.81
For Job 4286
Activity Activity Rate Activity driver Overhead
Grinding & incurred assigned
Polishing $31.47 per MH 3,000 $94,410
Product modification
per EH $235.29 per EH 32 $7,529
Providing power $15.29 per DLH 4,140 $63,301
System calibration $2,200 per batch 60 $132,000
Total overhead cost $297,240
No. Of units in job 1500
Average overhead cost per unit $198.16
2. Plant-wide overhead rate = Total overhead costs ÷ Estimated activity driver
= ($535,000 + $400,000 + $260,000 + $550,000) ÷ 17,000 DLH
= $102.65 per DLH
Product DLH Plant-wide Total OH cost units OH cost
produced per unit
Job 3175 460 $102.65 $46,210 120 $385.08
per DLH
Job 4286 4,140 $102.65 $424,971 1,500 $283.31
per DLH
