Answer:
$40,500
Explanation:
Under activity-based costing method, overheads are charged to units produced using cost drivers unlike the traditional absorption costing where overhead are charged using volume-related bases only like direct labour hours.
Cost drivers are the most important factors that cause a change in the amount of overhead incurred. For example, an appropriate cost driver for batch level cost would be the number of inspections done. And this would be used to charged overhead between the bay and case windows .
Overheads Activity rate = Activity overhead / number of cost drivers
Batch level overhead activity rate = Batch level overhead / of inspection
= $ 64,800/(25+15) inspections
= $1620 per inspection
Batch level cost allocated to Bay
= $1620 per inspection × No of inspection for Bay
= $1620 × 25
= $40,500
Batch level cost allocated to Bay= $40,500
Answer:
level of batch cost allocated to Bay = $40,500
Explanation:
Given;
Unit-level = $ 149,000
Labor hours = 870 620
Batch-level = $ 64,800 Inspections 25 15
Product-level = $ 34,000 Storage Space 4,700 sq feet 3,300 = sq feet
Facility-level $ 208,800
Machine hours = 10,200 7,200
To calculate the overhead activity rate, we use this method
Overheads Activity rate = Activity overhead / number of cost drivers
Level of overhead activity rate = Batch level overhead / of inspection
Level of batch activity rate = $ 64,800÷(25+15)
Level of batch activity rate = $64,800÷40
= $1620
level of batch cost allocated to Bay
level of batch cost allocated to Bay= level of batch activity rate × No of inspection for Bay
level of batch cost allocated to Bay= $1620 × 25
level of batch cost allocated to Bay= $40,500
level of batch cost allocated to Bay= $40,500
