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What amount of indirect costs will be allocated to the job

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Reference no: EM132814400

Question - Activity-Based Costing - Answer the following questions using the information below:

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?labor $320,000

Direct?labor?hours 800,000

Machine maintenance $120,000

Machine hours 960,000

Facility rent $200,000

Square?meters?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?meters?of area 50

Required -

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

2. What is the activity rate for machine maintenance costs?

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

4. When selling prices are based on costs assigned using the single cost driver, direct labor?hours, then would the Mossman job be overbilled or?underbilled?

5. What are the benefits of?ABC?

Reference no: EM132814400

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