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questions 1-4 solutions - serial problem

This serial problem began in Chapter I and continues through most of the book. If previous chapter seg. SERIAL PROBLEM ments were not completed, the serial problem can begin at this point. Business Solutions SP 4 After reading an article about activity-based costing in a trade journal for the furniture industry, P3 Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. Activity Driver Setting up machines. $20.000 25 batches Inspecting components. $ 7.500 5,000 parts Providing utilities $10,000 5,000 machine hours Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 615. Cost Alexander image/Shutterstock Direct materials Direct labor. Batches Number of parts Machine hours $2,500 $3.500 2 batches 400 parts 600 machine hours Required 1. Classify each of its three overhead activities as unit level, batch level, product level, or facility level 2. What is the total cost of Job 615 if Business Solutions applies overhead at 50% of direct labor cost? 3. What is the total cost of Job 615 if Business Solutions uses activity-based costing? 4. Which approach to assigning overhead gives a better representation of the costs incurred to produce Job 615? Explain

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