Answer:
a. predetermined overhead rate for each activity
initial concept formation = $3,310 per Project Change
design = $3 per Square feet
construction oversight = $1,130 per Month
b. Classification
unit-level activities :
design
batch level activities :
initial concept formation
Product level activities :
design<em> </em>
Facility level activities :
initial concept formation
construction oversight
Explanation:
This question requires application of Activity Based Costing (ABC) method of allocating overheads.
For each overhead a rate is determined as follows :
<em>initial concept formation </em>
Predetermined overhead rate = Overhead Cost / Number of Project Changes
= $52,960/ 16
= $3,310 per Project Change
<em>design </em>
Predetermined overhead rate = Overhead Cost / Square feet
= $420,000/ 140,000
= $3 per Square feet
<em>construction oversight </em>
Predetermined overhead rate = Overhead Cost / Number of Months
= $118,650/ 105
= $1,130 per Month
<em>Classification</em>
The way the activity is to be absorbed in costing determine its classification
