Purchase Orders

ABC Instructor Assignments 1. Kens Carpets sells carpet for both residential and business use. To better reckon costs, the company recently adopted an activity-based costing system. Last year, the company incurred $300,000 in command overhead costs. Based on an intense study of their company, the following activities, tryst bases, and percentages of overhead costs were determined Activity Allocation Base Proportion of Overhead Cost acquire cast of purchase orders 25% Materials processing public figure of lame(p) feet 50% Sales itemise of sales orders 25%The number of activities for residential and business is as follows Residential Business Total Total Overhead spell of purchase orders 700 500 1,200 75,000 Number of square feet 4,000,000 2,000,000 6,000,000 150,000 Number of sales orders 400 100 500 75,000 Required A. Calculate the total overhead that should be allocated to apiece of the three activities. Number of Purchase $75,000, Number of square feet $150,000, Number of sales orders $75,000. B. Calculate the overhead rates for each of the three activities. Number of purchase 62. 5, Number of square feet 0. 025, Number of sales orders 150 C. If a particular residential job requires 4 purchase orders and 1 sales order for total of 1,500 square feet of carpet, how much overhead should be allocated to the job? 4*62. 5 + 0. 025*1,500+1*150 = $437. 50 2. Mountaineer Tents manufactures and sells heavy and light duty tents to various out-of-door retailers. To better estimate costs, the company recently adopted an activity-based costing system.Last year, the company incurred $900,000 in overhead costs. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined Activity Allocation Base Proportion of Overhead Cost Purchasing Number of purchase orders 55% Inspections Number of inspections 20% Sales Number of sales orders 25% The number of activities for heavy and li ght duty tents is as follows Heavy-duty Light-duty Number of purchase orders 5,000 4,000 Number of inspections 3,000 1,000 Number of sales orders 800 400 RequiredA. Calculate the total overhead that should be allocated to each of the three activities. Number of purchase 4,950, Number of inspection 800, Number of sales 300 B. Calculate the overhead rates for each of the three activities. Number of purchase 1. 82, Number of inspection 5, Number of sales 4 C. If a bingle sales order requires 10 purchase orders and 30 inspections to fill, how much overhead should be utilise to the order? 1*4+10*1. 82+30*5 = 191. 82 3. The following overhead cost information is available for Millennium Inc. for 2006 Activity Allocation Base Overhead CostPurchasing Number of purchase orders $300,000 Machine setups Number of setups 150,000 Quality control Number of inspections 50,000 During the year, 4,000 purchase orders were issued 8,000 machine setups were performed and 2,000 inspections w ere conducted. Required A. Calculate the overhead rates for each of the three activities. Purchasing 75. 00, Machine Setups 18. 75, Quality Control 25 B. If a particular job requires 10 purchase orders, 6 setups, and 5 inspections to fill, how much overhead should be applied to the job? 10*75+6*18. 75+25*5 = 987. 5