Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $30 per unit and $45 is used in direct labor, while the direct material for the double is $45 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 10,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: Activity Cost Pools Driver Estimated Overhead Use per Twin Use per Double Framing Square Feet of Pine $270,000 6,000 3,000 Padding Square Feet of Quilting 230,000 130,000 100,000 Filling Square Feet of Filling 240,000 450,000 350,000 Labeling Number of Boxes 250,000 850,000 400,000 Inspection Number of Inspections 165,000 11,000 4,000 After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: Purchasing (per order) $56 Utilities (per square foot) 2 Machine Setups (per machine hour) 7 Supervision (per direct labor hour) 4 It estimates there will be 5 orders in the next year, and those jobs will involve the following: Orders 5 Square Feet 190 Machine Hours 40 Direct Labor Hours 30 Direct Materials $1,400 Direct Labor Rate $20 What is the total cost of the jobs? $________
Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $30 per unit and $45 is used in direct labor, while the direct material for the double is $45 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 10,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows: Activity Cost Pools Driver Estimated Overhead Use per Twin Use per Double Framing Square Feet of Pine $270,000 6,000 3,000 Padding Square Feet of Quilting 230,000 130,000 100,000 Filling Square Feet of Filling 240,000 450,000 350,000 Labeling Number of Boxes 250,000 850,000 400,000 Inspection Number of Inspections 165,000 11,000 4,000 After grouping cost pools and estimating overhead and activities, Box Springs determined these rates: Purchasing (per order) $56 Utilities (per square foot) 2 Machine Setups (per machine hour) 7 Supervision (per direct labor hour) 4 It estimates there will be 5 orders in the next year, and those jobs will involve the following: Orders 5 Square Feet 190 Machine Hours 40 Direct Labor Hours 30 Direct Materials $1,400 Direct Labor Rate $20 What is the total cost of the jobs? $________
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...
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Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin is $30 per unit and $45 is used in direct labor, while the direct material for the double is $45 per unit, and the labor cost is $50 per unit. Box Springs estimates it will make 5,000 twins and 10,000 doubles in the next year. It estimates the overhead for each cost pool and cost driver activities as follows:
| Activity Cost Pools |
Driver | Estimated Overhead |
Use per Twin |
Use per Double |
| Framing | Square Feet of Pine | $270,000 | 6,000 | 3,000 |
| Padding | Square Feet of Quilting | 230,000 | 130,000 | 100,000 |
| Filling | Square Feet of Filling | 240,000 | 450,000 | 350,000 |
| Labeling | Number of Boxes | 250,000 | 850,000 | 400,000 |
| Inspection | Number of Inspections | 165,000 | 11,000 | 4,000 |
After grouping cost pools and estimating overhead and activities, Box Springs determined these rates:
| Purchasing (per order) | $56 |
| Utilities (per square foot) | 2 |
| Machine Setups (per machine hour) | 7 |
| Supervision (per direct labor hour) | 4 |
It estimates there will be 5 orders in the next year, and those jobs will involve the following:
| Orders | 5 |
| Square Feet | 190 |
| Machine Hours | 40 |
| Direct Labor Hours | 30 |
| Direct Materials | $1,400 |
| Direct Labor Rate | $20 |
What is the total cost of the jobs?
$________
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