Huish Awnings Makes Custom Awnings for Homes and Businesses Distribution of Resource Consumption

Essay

Huish Awnings makes custom awnings 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:
Overhead Costs:
$$\begin{array} { | l | r | } \hline \text { Production overhead } & \$ 150,000 \\\hline \text { Office expense } & 100,000 \\\hline \text { Total } & \$ 250,000 \\\hline\end{array}$$
Distribution of resource consumption:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { r } \text { Making } \\\text { Awnings }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \text { Production overhead } & 45 \% & 40 \% & 15 \% / \% & 100 \% \\\hline \text { Office expenses } & 8 \% & 65 \% & 27 \% & 100 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
$$\begin{array} { | l | r | } \hline \text { Activity Cost Pool } & \text { Annual Activity } \\\hline \text { Making awnirgs } & 5,000 \text { metres } \\\hline \text { Job support } & 200 \text { jobs } \\\hline \text { Other } & \text { Not applicable } \\\hline\end{array}$$
Required:
a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Making } \\\text { Awnings }\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}$$
b)Compute the activity rates (i.e.,cost per unit of activity)for the Making Awnings and Job Support activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | } \hline & \text { Making Awnings } & \text { Job Support } \\\hline \text { Production overhead } & & \\\hline \text { Office expense } & & \\\hline \text { Total } & & \\\hline\end{array}$$
c)Prepare a report in good form of a job that involves making 80 yards of awnings and has direct materials and direct labour cost of $3,000.The sales revenue from this job is $4,000.