Holbrook, Inc The Following Are Two of the Jobs Completed During the Drivers

question 39

Essay

Holbrook, Inc., has identified the following overhead costs and cost drivers for next year: $\begin{array}{lclc}\text { Overhead Item } & \text { Expected Cost } & \text { Cost Driver } & \text { Expected Quantity } \\\text { Setup costs } & £ 960,000 & \text { Number of setups } & 4,800 \\\text { Ordering costs } & 160,000 & \text { Number of orders } & 20,000 \\\text { Maintenance } & 640,000 & \text { Machine hours } & 64,000 \\\text { Power } & 80,000 & \text { Kilowatt hours } & 200,000\end{array}$ The following are two of the jobs completed during the year: $\begin{array}{lrr}& \text { Job } 701 & \text { Job } 702 \\\text { Frime costs } & £ 25,000 & £ 18,000 \\\text { Units completed } & 650 & 500 \\\text { Direct labour hours } & 180 & 220 \\\text { Number of setups } & 12 & 15 \\\text { Number of orders } & 16 & 30 \\\text { Machine hours } & 360 & 300 \\\text { Kilowatt hours } & 180 & 650\end{array}$ The company's normal activity is 40,000 direct labour hours.
a.Determine the unit cost for each job using direct labour hours to apply overhead.
b.Determine the unit cost for each job using the four cost drivers. (Round amounts to two decimal places.)
c.Which method produces the more accurate cost assignment? Why?

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Definitions:

Paralanguage

The non-lexical components of communication used to convey meaning, such as tone, pitch, loudness, and rate of speech.

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The set of technical words or phrases specific to a subject, field, or area of expertise.

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An excessive focus on words rather than on substance or reality, often resulting in empty talk or jargon.

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the process of rewording or rephrasing a text or passage to achieve clearer understanding without changing its original meaning.