Hansen Company uses activity-based costing.The factory overhead budget for the coming period is $1,053,000,consisting of the following: The potential allocation bases and their estimated amounts were as follows:
a.Determine the overhead rate for each cost pool,using the most appropriate allocation base for each pool.
b.Job 80130 required $45,000 for direct materials,$20,000 for direct labor,2,000 direct labor hours,800 machine hours,five setups,and four design changes.Determine the cost of Job 80130.
c.Determine the cost of Job 80130 if Hansen used the direct labor hour method of applying overhead.
d.What is the reason behind the difference in the costs of the job using Activities-based costing vs.the direct labor hour method of applying overhead?

Question

Hansen Company uses activity-based costing.The factory overhead budget for the coming period is $1,053,000,consisting of the following:  The potential allocation bases and their estimated amounts were as follows:  ​ 
a.Determine the overhead rate for each cost pool,using the most appropriate allocation base for each pool.
b.Job 80130 required $45,000 for direct materials,$20,000 for direct labor,2,000 direct labor hours,800 machine hours,five setups,and four design changes.Determine the cost of Job 80130.
c.Determine the cost of Job 80130 if Hansen used the direct labor hour method of applying overhead.
d.What is the reason behind the difference in the costs of the job using Activities-based costing vs.the direct labor hour method of applying overhead?

Quizplus · Accepted Answer

The Answer of Hansen Company uses activity-based costing.The factory overhead budget for the coming period is $1,053,000,consisting of the following:  The potential allocation bases and their estimated amounts were as follows:  ​ 
a.Determine the overhead rate for each cost pool,using the most appropriate allocation base for each pool.
b.Job 80130 required $45,000 for direct materials,$20,000 for direct labor,2,000 direct labor hours,800 machine hours,five setups,and four design changes.Determine the cost of Job 80130.
c.Determine the cost of Job 80130 if Hansen used the direct labor hour method of applying overhead.
d.What is the reason behind the difference in the costs of the job using Activities-based costing vs.the direct labor hour method of applying overhead?

Hansen Company Uses Activity-Based Costing