Q- 11: Gulf manufacturing company of GCC makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours $14.60 per direct labor-hour* Customer orders Number of customer orders $360 per customer order Product testing per testing hour Selling per sales call Number of testing hours $79 Number of sales calls $1,494 The managing director of the company would like information concerning the cost of a recently completed order for two companies PDP company & hard-rock drills. The order required 150 direct labor-hours, 18 hours of product testing, and nine sales calls. Required: Prepare a report showing the overhead cost of the order for hard- rock drills according to the activity based costing system. What is the total overhead cost assigned to the order?
Q- 11: Gulf manufacturing company of GCC makes specialty tools used in the mining industry. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours $14.60 per direct labor-hour* Customer orders Number of customer orders $360 per customer order Product testing per testing hour Selling per sales call Number of testing hours $79 Number of sales calls $1,494 The managing director of the company would like information concerning the cost of a recently completed order for two companies PDP company & hard-rock drills. The order required 150 direct labor-hours, 18 hours of product testing, and nine sales calls. Required: Prepare a report showing the overhead cost of the order for hard- rock drills according to the activity based costing system. What is the total overhead cost assigned to the order?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 27BEA: Use the following information for Brief Exercises 4-27 and 4-28: Quillen Company manufactures a...
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Q- 11:
Gulf manufacturing company of GCC makes specialty tools used
in the mining industry. The company uses an activity-based costing
system for internal decision-making purposes. The company has
four activity cost pools as listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Order size
Number of direct labor-hours
$14.60 per direct labor-hour*
Customer orders
Number of customer orders
$360 per customer order
Product testing
per testing hour
Selling
Number of testing hours
$79
Number of sales calls
$1,494
per sales call
The managing director of the company would like information
concerning the cost of a recently completed order for two
companies PDP company & hard-rock drills. The order required
150 direct labor-hours, 18 hours of product testing, and nine sales
calls.
Required:
Prepare a report showing the overhead cost of the order for hard-
rock drills according to the activity based costing system. What is
the total overhead cost assigned to the order?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:
9781337119207
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:
9781337119207
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College