Answer:
Overhead Cost Category (Activity Cost Pool) Cost
Supervision $2,160
Depreciation of machinery $28,840
Assembly line preparation <u> $23,000</u>
Total overhead $54,000
Supervision
Direct labor cost ($) $6,200 $11,800 $18,000
Depreciation of machinery
Machine hours 400 hours 800 hours 1,200 hours
Assembly line preparation Setups (number)
32 times 93 times 125 times
1)
overhead costs assigned to Rounded Edge
supervision = $2,160 x ($6,200 / $18,000) = $744
depreciation = $28,840 x (400 / 1,200) = $9,613
assembly line preparation = $23,000 x (32/125) = $5,888
total overhead costs = $16,245
overhead costs assigned to Squared Edge
total overhead costs = $54,000 - $16,245 = $37,755
2)
total costs assigned to Rounded Edge
materials $9,500
direct labor $6,200
overhead $16,245
total $31,945
cost per foot = $31,945 / 10,500 = $3.0424 per foot
total costs assigned to Squared Edge
materials $21,600
direct labor $11,800
overhead $37,755
total $71,155
cost per foot = $71,155 / 14,000 = $5.0825 per foot
3)
The average cost per foot of Rounded Edge decreased because lower overhead costs were allocated to their production.
The average cost per foot of Squared Edge increased because higher overhead costs were allocated to their production.
