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American Delights manufactures a wide variety of holiday and seasonal decorative items. American's activity-based costing overhead rates are:
Purchasing $380 per order
Storing $2 per square foot/days
Machining $100 per machine hour
Supervision $5 per direct labor hour
The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 40 direct labor hours. The cost of direct materials on the job was $19,000 and the direct labor rate is $30 per hour.
Determine the total cost of the Snow Man project.

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Answer:

Total cost= $34,780

Explanation:

First, we need to allocate costs to Snow Man project:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Purchasing= 380*1= 380

Storing= 2*4,000= 8,000

Machining= 100*60= 6,000

Supervision= 5*40= 200

Total allocated costs= $14,580

Now, the total costs:

Total cost= 19,000 + 30*40 + 14,580

Total cost= $34,780

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