Inskeep Draperies Makes Custom Draperies for Homes and Businesses

Essay

Inskeep Draperies makes custom draperies 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. 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 Drapes and Job Support activity cost pools by filling in the table below: c. Prepare an action analysis report in good form of a job that involves making 70 yards of drapes and has direct materials and direct labor cost of $1,870. The sales revenue from this job is $3,700.
For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; production overhead as a Red cost; and office expense as a Yellow cost.