Answer:
A. The overhead rates for each activity using ABC would be as follows:
overhead rate Client Consultation is 170 per Contact Hour
overhead rate Drawing is 80 per Design Hour
overhead rate Models is 1.40 per Square Foot
overhead rate Supervision is 180 per day
overhead rate Billings is 360 per job
B. The Assignment of costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete would be as follows:
Assignment of Overhead Costs for Job Client Consultation is $11,900
Assignment of Overhead Costs for Job Drawing is $1,600
Assignment of Overhead Costs for Job Models is $4,200
Assignment of Overhead Costs for Job Supervision is $2,520
Assignment of Overhead Costs for Job Billings is $360
Explanation:
A. In order to calculate the overhead rates for each activity using ABC we would have to make the following calculation:
overhead rate Client Consultation=amount/Volume of Allocation Base
overhead rate Client Consultation=$127,500/750=170 per Contact Hour
overhead rate Drawing=$96,000/1,200=80 per Design Hour
overhead rate Models =$21,000/15,000=1.40 per Square Foot
overhead rate Supervision =$40,500/225=180 per day
overhead rate Billings =$54,000/150=360 per job
B. The Assignment of costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete would be calculated as follows:
Assignment of Overhead Costs for Job Client Consultation=70 Contact Hours*170=$11,900
Assignment of Overhead Costs for Job Drawing=20 Design Hours*80=$1,600
Assignment of Overhead Costs for Job Models=3,000 Square Feet*1.40=$4,200
Assignment of Overhead Costs for Job Supervision=14 Days*180=$2,520
Assignment of Overhead Costs for Job Billings=1 Job*360=$360
