Find out the amount of cost assigned to receiving activity

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Reference no: EM131721759

Question - Cummings Company has identified the following overhead activities costs and activity drivers for the coming year:

 

Activity

Expected cost

Activity Driver

Activity Capacity

Setting up

$120,000

Number of setups

600

Inspecting

$  90,000

Inspection hours

9,000

Grinding

$180,000

Machine hours

36,000

Receiving

      ?

Number of parts

100,000

 

The company produces several different subassemblies used by other manufacturers.  Information on separate batches for two of these subassemblies follows:

 

 

F

G

Direct Materials

$ 1,700

  $1,900

Direct Labour

$ 1,200

 $ 1,200

Units Completed

  200

    100

Number of setups

      2

       2

Inspection hours

      8

       4

Machine hours

    40

      60

Parts used

    40

      80

 

 

The company's normal activity is 20,000 direct labour hours.  Each batch uses 100 hours of direct labour.  Upon investigation, you discover that Receiving employs a worker, who spends 75% of her time on the receiving activity and 25% of her time on inspecting products.  Her salary is $80,000.  Receiving also uses a forklift, at a cost of $12,000 per year for amortization and fuel.  The forklift is used only in receiving.

 

 

 

How would you...

 

a) Find out the amount of cost assigned to the receiving activity?

 

b) Find the activity rate for receiving?

Reference no: EM131721759

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