Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Production Activity Indirect Labor Indirect Materials Other Overhead Grinding $ 390,000 Polishing $ 145,000 Product modification 550,000 Providing power $ 255,000 System calibration 470,000
Additional information on the drivers for its production activities follows. Grinding 12,000 machine hours Polishing 12,000 machine hours Product modification 1,400 engineering hours Providing power 16,000 direct labor hours System calibration 850 batches
Job 3175 Job 4286 Number of units 120 units 1,500 units Machine hours 300 MH 3,000 MH Engineering hours 29 eng. hours 32 eng. hours Batches 20 batches 60 batches Direct labor hours 460 DLH 4,140 DLH
1. Compute the activity overhead rates using ABC. Combine the grinding and polishing activities into a single cost pool. What is the overhead cost per unit for Job 3175? What is the overhead cost per unit for Job 4286?
2. If the company uses a plantwide overhead rate based on direct labor hours, what is the overhead cost for each unit of Job 3175? Of Job 4286?