Huish Awnings Makes Custom Awnings for Homes and Businesses Distribution of Resource Consumption

question 53

Essay

Huish Awnings makes custom awnings for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools:
Overhead Costs:
$$\begin{array} { | l | r | } \hline \text { Production overhead } & \$ 150,000 \\\hline \text { Office expense } & 100,000 \\\hline \text { Total } & \$ 250,000 \\\hline\end{array}$$
Distribution of resource consumption:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { r } \text { Making } \\\text { Awnings }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \text { Production overhead } & 45 \% & 40 \% & 15 \% / \% & 100 \% \\\hline \text { Office expenses } & 8 \% & 65 \% & 27 \% & 100 \% \\\hline\end{array}$
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
$$\begin{array} { | l | r | } \hline \text { Activity Cost Pool } & \text { Annual Activity } \\\hline \text { Making awnirgs } & 5,000 \text { metres } \\\hline \text { Job support } & 200 \text { jobs } \\\hline \text { Other } & \text { Not applicable } \\\hline\end{array}$$
Required:
a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Making } \\\text { Awnings }\end{array} & \text { Job Support } & \text { Other } & \text { Total } \\\hline \begin{array} { l } \text { Production } \\\text { overhead }\end{array} & & & & \\\hline \text { Office expense } & & & & \\\hline \text { Total } & & & & \\\hline\end{array}$$
b)Compute the activity rates (i.e.,cost per unit of activity)for the Making Awnings and Job Support activity cost pools by filling in the table below:
$$\begin{array} { | l | l | l | } \hline & \text { Making Awnings } & \text { Job Support } \\\hline \text { Production overhead } & & \\\hline \text { Office expense } & & \\\hline \text { Total } & & \\\hline\end{array}$$
c)Prepare a report in good form of a job that involves making 80 yards of awnings and has direct materials and direct labour cost of $3,000.The sales revenue from this job is $4,000.

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Definitions:

Apical Meristem

Actively dividing tissues in plants located at the tips of roots and shoots, enabling growth in length.

Modified Leaves

Leaves that have evolved to serve functions other than photosynthesis, such as tendrils for climbing, spines for protection, or storage organs.

Spines

Hard, sharp outgrowths on an animal's body serving for protection or as part of a plant's defense mechanism; in botanical context, they are modified leaves, stipules, or parts of leaves.

Herbivores

Organisms that primarily eat plants, including leaves, fruits, and other plant parts.