Q 36PGA-1 - Horngren'S Financial And Managerial Accounting

Question

Question: Blanchette Plant Service completed a special landscaping job for Kerry Company. Blanchette uses ABC and has the following predetermined overhead allocation rates:

                  Activity                                                                   Predetermined

                                                  Allocation Base               Overhead Allocation Rate

                Designing               Number of designs                  \( 290 per design

                  Planting                Number of plants                     \) 20 per plant

 

The Kerry job included \(750 in plants; \)1,300 in direct labor; one design; and 30 plants.

Requirements

1. What is the total cost of the Kerry job?

 

Step-by-Step Solution

Answer

Answer

Total cost of Kerry job: $2,190

 

Step 1: Total overhead cost

$$\begin{gathered} \mathit{D}\mathit{e}\mathit{s}\mathit{i}\mathit{g}\mathit{n}\mathbf{ }\mathit{c}\mathit{o}\mathit{s}\mathit{t}\mathbf{ }\mathbf{=}\mathit{N}\mathit{o}\mathbf{.}\mathbf{ }\mathit{o}\mathit{f}\mathbf{ }\mathit{d}\mathit{e}\mathit{s}\mathit{i}\mathit{g}\mathit{n}\mathit{s}\mathbf{ }\mathbf{\times }\mathbf{ }\mathit{P}\mathit{r}\mathit{e}\mathit{d}\mathit{e}\mathit{t}\mathit{e}\mathit{r}\mathit{m}\mathit{i}\mathit{n}\mathit{e}\mathit{d}\mathbf{ }\mathit{a}\mathit{l}\mathit{l}\mathit{o}\mathit{c}\mathit{a}\mathit{t}\mathit{i}\mathit{o}\mathit{n}\mathbf{ }\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathit{h}\mathit{e}\mathit{a}\mathit{d}\mathbf{ }\mathit{r}\mathit{a}\mathit{t}\mathit{e} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{1}\mathbf{\times }\mathbf{\$}\mathbf{290} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{290} \\ \mathit{P}\mathit{l}\mathit{a}\mathit{n}\mathit{t}\mathit{i}\mathit{n}\mathit{g}\mathbf{ }\mathit{c}\mathit{o}\mathit{s}\mathit{t}\mathbf{ }\mathbf{=}\mathit{N}\mathit{o}\mathbf{.}\mathbf{ }\mathit{o}\mathit{f}\mathbf{ }\mathit{p}\mathit{l}\mathit{a}\mathit{n}\mathit{t}\mathit{s}\mathbf{ }\mathbf{\times }\mathbf{ }\mathit{P}\mathit{r}\mathit{e}\mathit{d}\mathit{e}\mathit{t}\mathit{e}\mathit{r}\mathit{m}\mathit{i}\mathit{n}\mathit{e}\mathit{d}\mathbf{ }\mathit{a}\mathit{l}\mathit{l}\mathit{o}\mathit{c}\mathit{a}\mathit{t}\mathit{i}\mathit{o}\mathit{n}\mathbf{ }\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathit{h}\mathit{e}\mathit{a}\mathit{d}\mathbf{ }\mathit{r}\mathit{a}\mathit{t}\mathit{e} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{30}\mathbf{\times }\mathbf{\$}\mathbf{20} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{ }\mathbf{\$}\mathbf{600} \\ \mathit{T}\mathit{o}\mathit{t}\mathit{a}\mathit{l}\mathbf{ }\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathit{h}\mathit{e}\mathit{a}\mathit{d}\mathbf{ }\mathbf{cos}\mathit{t}\mathbf{ }\mathbf{=}\mathit{D}\mathit{e}\mathit{s}\mathit{i}\mathit{g}\mathit{n}\mathbf{ }\mathbf{cos}\mathit{t}\mathbf{ }\mathbf{+}\mathit{P}\mathit{l}\mathit{a}\mathit{n}\mathit{n}\mathit{i}\mathit{n}\mathit{g}\mathbf{ }\mathbf{cos}\mathit{t} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{290}\mathbf{\hspace{0.17em}}\mathbf{+}\mathbf{\$}\mathbf{600} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{890} \end{gathered}$$

Step 2: Total cost of Kerry job

$$\begin{gathered} \mathit{T}\mathit{o}\mathit{t}\mathit{a}\mathit{l}\mathbf{ }\mathbf{ }\mathbf{cos}\mathit{t}\mathbf{ }\mathbf{=}\mathit{D}\mathit{i}\mathit{r}\mathit{e}\mathit{c}\mathit{t}\mathbf{ }\mathit{l}\mathit{a}\mathit{b}\mathit{o}\mathit{u}\mathit{r}\mathbf{ }\mathbf{cos}\mathit{t}\mathbf{ }\mathbf{+}\mathit{T}\mathit{o}\mathit{t}\mathit{a}\mathit{l}\mathbf{ }\mathit{o}\mathit{v}\mathit{e}\mathit{r}\mathit{h}\mathit{e}\mathit{a}\mathit{d}\mathbf{ }\mathbf{cos}\mathit{t}\mathbf{ } \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{300}\mathbf{\hspace{0.17em}}\mathbf{+}\mathbf{\$}\mathbf{890} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{2}\mathbf{,}\mathbf{190} \end{gathered}$$