Question

Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools.
Activity Cost Pool Cost Drivers Estimated Overhead Expected Use of Cost
Driver per Activity
Loading and unloading Number of pieces $97,000 91,500
Travel Miles driven 467,000 585,000
Logistics Hours 62,000 3,150
Compute the activity-based overhead rates for each pool. (Round answers to 2 decimal places, e.g. 12.75.)
Determine the overhead allocated to Job XZ3275 which has 150 pieces, requires 200 miles of driving, and 0.75 hours of logistics. (Round answer to 2 decimal places, e.g. 12.75.)

Answer 1

Answer:

Part 1

Calculation of activity-based overhead rates

Cost of Each Activity = Cost of Activity ÷ Number of times that Activity is performed

Loading and unloading = $97,000 ÷ 91,500

                                       = $1.06 per piece

Travel = $467,000 ÷ 585,000

           = $0.80 per mile

Logistics = $62,000 ÷ 3,150

               = $19,68

Part 2

Overhead allocation to Job XZ3275

Loading and unloading (150 × $1.06) = $159.00

Travel ($0.80 × 200)                           = $160.00

Logistics ($19,68 × 0.75)                     =    $14.76

Total Overheads                                 = $333.76