Problems:
1. Jardon 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
|
2. 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:
| |
Painting
|
Job Support
|
Other
|
Total
|
|
Painting overhead
|
$ 99,000
|
$ 77,000
|
$44,000
|
$220,000
|
|
Office expense
|
14,000
|
84,000
|
42,000
|
140,000
|
|
Total
|
$113,000
|
$161,000
|
$86,000
|
$360,000
|
Required:
a. Compute the activity rates (i.e., cost per unit of activity) 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 69 square meters and has direct materials and direct labor cost of $2,190. The sales revenue from this job is $3,400. 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.