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Haskell Hardwood Floors installs oak and other hardwood floors in homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity based costing system:
Overhead costs:
Production overhead.........
$120,000
Office expense..................
140,000
Total..................................
$260,000
Distribution of resource consumption:
Installing
Job
Activity Cost Pools
Floors
Support
Other
Total
55%
25%
20%
100%
50%
30%
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The amount of activity for the year is as follows:
Activity Cost Pool
Annual Activity
Installing floors......
800 squares
Job support.............
100 jobs
Other......................
Not applicable
A "square" is a measure of area that is roughly equivalent to 1,000 square feet.
Required:
a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
Production overhead..........
Office expense...................
Total...................................
b.Compute the activity rates for the Installing Floors and Job Support activity cost pools by filling in the table below:
c. Compute the overhead cost, according to the activity-based costing system, of a job that involves installing 3.2 squares.
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