Hasty Hardwood Floors Installs Oak and Other Hardwood Floors in Homes

Essay

Hasty Hardwood Floors installs oak and other hardwood floors in 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-based costing system:
$$\begin{array} { | l | r | } \hline \text { Overhead Costs: } & \\\hline \text { Production overhead } & \$ 190,000 \\\hline \text { Office expense } & \$ 140,000 \\\hline \text { Total } & \$ 330,000 \\\hline\end{array}$$
Distribution of Resource Consumption:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array}{|l|r|r|r|r|}\hline & \begin{array}{r}\text { Installing } \\\text { Floors }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \text { Production overhead } & 40 \% & 40 \% & 20 \% & 100 \% \\\hline \text { Office expenses } & 10 \% & 60 \% & 30 \% & 100 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
$$\begin{array} { | l | r | } \hline \text { Activity Cost Pool } & \text { Annual Activity } \\\hline \text { Installing floors } & \text { 200 squares } \\\hline \text { Job support } & \text { 160 jobs } \\\hline \text { Other } & \text { Not applicable } \\\hline\end{array}$$
A "square" is a measure of area that is roughly equivalent to 1,000 square metres.
Required:
a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Installing } \\\text { Floors }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Production } \\\text { overhead }\end{array} & & & & \\\hline \text { Office expense } & & & & \\\hline \text { Total } & & & & \\\hline\end{array}$$
b)Compute the activity rates (i.e.,cost per unit of activity)for the Installing Floors and Job Support activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | } \hline & \text { Installing Floors } & \text { Job Support } \\\hline \text { Production overhead } & & \\\hline \text { Office expense } & & \\\hline \text { Total } & & \\\hline\end{array}$$
c)Compute the overhead cost,according to the activity-based costing system,of a job that involves installing 3.4 squares.