Holbrook, Inc., has identified the following overhead costs and cost drivers for next year: ...
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Accounting
Holbrook, Inc., has identified the following overhead costs and cost drivers for next year:
| Overhead Item | Expected Cost | Cost Driver | Expected Quantity |
| Setup costs | $960,000 | Number of setups | 4,800 setups |
| Ordering costs | $160,000 | Number of orders | 20,000 orders |
| Maintenance | $640,000 | Machine hours | 64,000 MHs |
| Power | $80,000 | Kilowatt hours | 200,000 kw hrs. |
The following are two of the jobs completed during the year:
|
| Job 701 | Job 702 |
| Prime costs | $25,000 | $18,000 |
| Units completed | 650 | 500 |
| Direct labour hours | 180 | 220 |
| Number of setups | 12 | 15 |
| Number of orders | 16 | 30 |
| Machine hours | 360 | 300 |
| Kilowatt hours | 180 | 650 |
The companys normal activity is 40,000 direct labour hours.
Required
- Determine the unit cost of each job using direct labours to apply overhead
- Determine the unit cost for each job using Activity-based costing system (round off amounts to two decimal places.)
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