Reference no: EM133074787
Question - The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.
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Activity Cost Pool
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Budgeted Overhead Cost
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Cost Driver
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Budgeted Level for Cost Driver
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Pool Rate
|
|
Machine setups
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300,000
|
Number of setups
|
100
|
$3000 per setup
|
|
Material handling
|
90,000
|
Weight of raw material
|
30,000 lb.
|
$3 per pound
|
|
Hazardous waste control
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60,000
|
Weight of hazardous chemicals used
|
6,000 lb.
|
$10 per pound
|
|
Quality control
|
225,000
|
# of inspections
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3,000
|
$75 per inspection
|
|
Other overhead costs
|
400,000
|
Machine hours
|
20,000
|
$20 per machine hour
|
|
Total
|
$1,075,000
|
|
|
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An order for 5,000 boxes of medical-testing agent has the following production requirements.
Machine setups 7 setups
Raw material 10,000 pounds
Hazardous materials 2,000 pounds
Inspections 10 inspections
Machine hours 700 machine hours
1. Compute the total overhead that should be assigned to the medical-testing agent order.
2. What is the overhead cost per box of testing agent?
3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour.
4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order?
a. In total.
b. Per box of testing agent.