Jared Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system.
|
Activity Cost Pool
|
Activity Measure
|
Annual Activity
|
|
Painting overhead..............
|
Square meters
|
10,000
|
square meters
|
|
Job support.........................
|
Jobs
|
200
|
jobs
|
|
Other..................................
|
None
|
Not
|
applicable
|
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below:
|
|
|
Job
|
|
|
|
|
Painting
|
Support
|
Other
|
Total
|
|
Painting overhead.....
|
$ 99,000
|
$ 45,000
|
$36,000
|
$180,000
|
|
Office expense..........
|
6,000
|
78,000
|
36,000
|
120,000
|
|
Total..........................
|
$105,000
|
$123,000
|
$72,000
|
$300,000
|
Required:
a. Compute the activity rates for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent.
|
|
|
Job
|
|
|
Painting
|
Support
|
|
Painting overhead.....
|
|
|
|
Office expense..........
|
|
|
|
Total..........................
|
|
|
b. Prepare an action analysis report in good form of a job that involves painting 71 square meters and has direct materials and direct labor cost of $2,410. The sales revenue from this job is $3,800.
For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; painting overhead as a Red cost; and office expense as a Yellow cost.