order for 1,000 boxes of medical-testing agent has the following production requirements. Machine setups 5 setups Raw material 12,000 pounds Hazardous materials 4,000 pounds Inspections 10 inspections Machine hours 500 machine ho

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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PR 5-52 (Algo) Activity Cost Pools; Cost Drivers; Pool Rates (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-7)

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The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.

Activity Cost Pool Budgeted Overhead Cost Cost Driver Budgeted Level for Cost Driver Pool Rate
Machine setups $ 450,000 Number of setups 150   $ 3,000 per setup
Material handling 60,000 Weight of raw material 30,000 pound $ 2 per pound
Hazardous waste control 50,000 Weight of hazardous chemicals used 5,000 pound $ 10 per pound
Quality control 150,000 Number of inspections 2,000   $ 75 per inspection
Other overhead costs 400,000 Machine hours 20,000   $ 20 per machine hour
Total $ 1,110,000          

An order for 1,000 boxes of medical-testing agent has the following production requirements.

Machine setups 5 setups
Raw material 12,000 pounds
Hazardous materials 4,000 pounds
Inspections 10 inspections
Machine hours 500 machine hours

 

PR 5-52 (Algo) Part 1 The controller for Tulsa Medical Supply Company...

Required:

  1. Compute the total overhead that should be assigned to the medical-testing agent order.

  2. What is the overhead cost per box of testing agent?

  3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour.

  4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order?

    1. In total.

    2. Per box of testing agent.

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What about requirement 4? 

Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order?

  1. In total.

  2. Per box of testing agent.

     

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