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:

Dumped

The act of disposing of waste or unwanted materials in an unauthorized area, often causing environmental harm.

Landfills

Sites for the disposal of waste material by burial and the oldest form of waste treatment.

Service Flow Economy

An economic model focused on the provision and consumption of services rather than the production and sale of goods.

Xerox Corporation

An American global corporation that sells print and digital document products and services, widely known for its contributions to the development of the photocopier.