Reference no: EM132537335

Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

Cost Pool                             Overhead Costs            Cost driver              Activity level

Supervision of direct labour      $320,000              Direct labour hours            800,000

Machine maintenance               $120,000                Machine hours               960,000

Facility rent                             $200,000                   Square metres of area       100,000

Total overhead costs                  $640,000

The accounting records show the Mossman Job consumed the following resources:

Cost driver Actual level

Direct labour-hours 200

Machine-hours 1,600

Square metres of area 50

Question 1: If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job?

Question 2: What is the activity rate for machine maintenance costs?

Question 3: If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job?

Question 4: When selling prices are based on costs assigned using the single cost driver, direct labour hours, then would the Mossman job be overbilled or underbiiled?