Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs

3-35 Predicting Costs

Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs:

1. Fuel costs of driving vehicles, $0.20 per mile, driven 17,000 miles per month
2. Equipment rental cost, $6,000 per piece of equipment per month for seven pieces for three
months
3. Ambulance and EMT personnel cost for a soccer tournament, $1,200 for each 250 tournament participants; the tournament is expecting 2,400 participants
4. Purchasing department cost, $7,500 per month plus $4 per material order processed at 4,000 orders in one month

Click here for the solution: Given the following four cost behaviors and expected levels of cost-driver activity, predict total costs

Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows

12-49 Direct and Step-Down Methods of Allocation

Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows:

Building and grounds $ 20,000
Personnel 1,200
General factory administration* 28,020
Cafeteria operating loss 1,430
Storeroom 2,750
Machining 35,100
Assembly 56,500
Total $145,000

*To be allocated before cafeteria.

Management has decided that the most sensible product costs are achieved by using departmental overhead rates. These rates are developed after allocating appropriate service department costs to production departments.

Cost-allocation bases for allocation are to be selected from the following data:
Square Feet of Direct-Labor Number of Floor Space Total Number of Department Hours Employees Occupied Labor Hours Requisitions
Building and grounds — — — — —
Personnel* — — 2,000 — —
General factory administration — 35 7,000 — —
Cafeteria operating loss — 10 4,000 1,000 —
Storeroom — 5 7,000 1,000 —
Machining 5,000 50 30,000 8,000 3,000
Assembly 15,000 100 50,000 17,000 1,500
20,000 200 100,000 27,000 4,500

*Basis used is number of employees.

1. Allocate service department costs by the step-down method. Develop overhead rates per direct labor hour for machining and assembly.
2. Same as in number 1, using the direct method.
3. What would be the plantwide factory-overhead application rate, assuming that direct-labor hours are used as a cost-allocation base?
4. Using the following information about two jobs, prepare three different total overhead costs for each job, using rates developed in numbers 1, 2, and 3.
Direct-Labor Hours
Machining Assembly
Job K10 19 2
Job K12 3 18

Click here for the solution: Griffin Company has prepared departmental overhead budgets for normal activity levels before allocations as follows

Monthly production costs in Pesavento Company for two levels of production are

BE5-1 Monthly production costs in Pesavento Company for two levels of production are:

Cost 2,000 units 4,000 units

Indirect labor $10,000 $20,000
Supervisory salaries 5,000 5,000
Maintenance 4,000 7,000

Indicate which costs are variable, fixed, and mixed, and give the reason for each answer.

Click here for the solution: Monthly production costs in Pesavento Company for two levels of production are