Envision Company Uses Activity-Based Costing (ABC)for Allocating Manufacturing Overhead Costs

question 10

Essay

Envision Company uses activity-based costing (ABC)for allocating manufacturing overhead costs to jobs and it has established the following cost drivers and rates:
$\begin{array}{lll}\text { Activity}&\text { Cost Driver}&\text { Rate}\\\text { Material handling } & \text { Number of parts used } & \$ 8.00 \text { per part } \\\text { Machine setups } & \text { Number of production runs } & \$ 3,000 \text { per run } \\\text { Assembly and inspection } & \text { Number of direct labor hours } & \$ 20.00 \text { per DLH } \\\text { Quality control } & \text { Number of units inspected } & \$ 5.00 \text { per unit }\end{array}$

During July, Job #2005 produced 1,500 units and required the following activity: 1,800 parts, 2 production runs, and 325 direct labor hours.
(a.)Calculate the amount of manufacturing overhead applied to Job #2005.
(b.)Explain the advantage of using the ABC approach.

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Definitions:

Income Distribution

How the total earnings are distributed among the members of a community.

John Rawls

A philosopher known for developing the theory of justice as fairness, which considers how societal resources can be distributed equitably.

Income Distribution

The way in which total income is shared amongst the population.

Liberalism

A school of thought advocating for personal liberty, the consent of those under governance, and fairness within the legal system.