Q42PGB_1 - Horngren'S Financial And Managerial Accounting

Question

Rennie Plant Service completed a special landscaping job for Brenton Company. rennie 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 Rennie job included \(1,500 in plants; \)800 in direct labor; one design; and 30 plants.

 

Requirements

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

Step-by-Step Solution

Answer

Total cost of Brenton job: $1,690

Step-by-Step-Solution Step 1: Total overhead cost

$$\begin{gathered} \mathbf{Design}\mathbf{ }\mathbf{cost}\mathbf{=}\mathbf{No}\mathbf{.}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{designs}\mathbf{\times }\mathbf{Predetermined}\mathbf{ }\mathbf{over}\mathbf{ }\mathbf{head}\mathbf{ }\mathbf{allocation}\mathbf{ }\mathbf{rate} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{1}\mathbf{\times }\mathbf{\$}\mathbf{290} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{290} \end{gathered}$$

$$\begin{gathered} \mathbf{Planting}\mathbf{ }\mathbf{cost}\mathbf{=}\mathbf{No}\mathbf{.}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{plants}\mathbf{\times }\mathbf{Predetermined}\mathbf{ }\mathbf{overhead}\mathbf{ }\mathbf{allocation}\mathbf{ }\mathbf{rate} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{30}\mathbf{\times }\mathbf{\$}\mathbf{20} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{600} \end{gathered}$$

$$\begin{gathered} \mathbf{Total}\mathbf{ }\mathbf{overhead}\mathbf{ }\mathbf{cost}\mathbf{=}\mathbf{Design}\mathbf{ }\mathbf{cost}\mathbf{+}\mathbf{Planting}\mathbf{ }\mathbf{cost} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{290}\mathbf{+}\mathbf{\$}\mathbf{600} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{890} \end{gathered}$$

Step 2: Total cost of Brenton job

$$\begin{gathered} \mathbf{Total}\mathbf{ }\mathbf{cost}\mathbf{=}\mathbf{Direct}\mathbf{ }\mathbf{labor}\mathbf{ }\mathbf{cost}\mathbf{+}\mathbf{Total}\mathbf{ }\mathbf{overhead}\mathbf{ }\mathbf{cost} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{800}\mathbf{+}\mathbf{\$}\mathbf{890} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{690} \end{gathered}$$