Question

Cardiff and Delp is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period. (Round activity rate answers to 2 decimal places.)
Activities Costs
Design department
Client consultation 2,100 contact hours $ 315,000
Drawings 1,800 design hours 104,400
Modeling 46,000 square feet 32,200
Project
management
department
Supervision 1,200 days $ 228,000
Billings 8 jobs 8,300
Collections 8 jobs 13,140
Required: 1. & 2. Using ABC, compute the firm's activity overhead rates. Form activity cost pools where appropriate. Assign costs to a 7,400-square-foot job that requires 410 contact hours, 352 design hours, and 195 days to complete. (Round activity rate answers to 2 decimal places.)

Answer 1

Answer:

Activity Rates

Consultation  $150

Drawings        $58

Modeling         $0.7

supervision       $190

Billings              $1037.5

Collections       $1642.5

Total overhead allocated: $ 126,826

Explanation:

First, we divide the cost of each activity over the base total to get the rate.

$\left[\begin{array}{ccccc} Activity&Driver&cost&Total&Rate\\ Consultation& contact hours&315000&2100&150\\ Drawings& desing hours&104400&1800&58\\ Modeling& square feet&32200&46000&0.7\\ supervision& days&228000&1200&190\\ Billings& jobs&8300&8&1037.5\\ Collections& jobs&13140&8&1642.5\\\end{array}\right]$

Now we apply this rate against the job activity measurement:

$\left[\begin{array}{ccccc} Activity&Job& Rate& Allocated\\ Consultation&410&150&61500\\ Drawings&352&58&20416&\\ Modeling&7400&0.7&5180&\\ supervision&195&190&37050&\\ Billings&1&1037.5&1037.5&\\ Collections&1&1642.5&1642.5&\\ Total&&&126826&\\\end{array}\right]$