Reference no: EM13518345

Imai Draperies makes custom draperies for 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 cost pools.

Overhead costs:
Production overhead	$240,000
Office expense	160,000
Total	$400,000

Distribution of resource consumption:

	Making	Job
Activity Cost Pools	Drapes	Support	Other	Total
Production overhead	35%	45%	20%	100%
Office expense	15%	55%	30%	100%

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
Making drapes	4,000 yards
Job support	100 jobs
Other	Not applicable

Required:

a. Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

	Making	Job
	Drapes	Support	Other	Total
Production overhead
Office expense
Total

b. Compute the activity rates (i.e., cost per unit of activity) for the Making Drapes and Job Support activity cost pools by filling in the table below:

	Making	Job
	Drapes	Support
Production overhead
Office expense
Total

c. Prepare an action analysis report in good form of a job that involves making 53 yards of drapes and has direct materials and direct labor cost of $1,480. The sales revenue from this job is $5,200. For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; production overhead as a Red cost; and office expense as a Yellow cost.