Phoenix Company Makes Custom Covers for Air Conditioning Units for Homes

Essay

Phoenix Company makes custom covers for air conditioning units 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:


Distribution of Resource Consumption:



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:

Required:

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

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



c) (Appendix 5A) Prepare an action analysis report in good form of a job that involves making 50 yards of covers and has direct materials and direct labour cost of $1,500. The sales revenue from this job is $2,500. For purposes of this action analysis report, direct materials and direct labour should be classified as a Green cost, production overhead as a Red cost, and office expense as a Yellow cost.