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CH 05B (Empty)
CH 05B (Empty)
Quinnipiac Padfolio Club makes two products (Padfolios and Business Cards) for students to use during interview season. The company has two
production departments (Forming and Assembly) and operates at capacity. The controller has asked you to compare plant-wide, department, and
activity- based cost allocation.
Direct Material and Direct Labor is incurred in both production departments (Forming & Assembly) and is directly traced to the two product lines
(Padfolios & Business Cards). There are also two types of overhead (Setup & Supervision) incurred in the departments. Overhead costs need to be
allocated to the two product lines so the Quinnipiac Padfolio Club can calculate the costs of each product line.
Budgeted information for the year ended December 31, 2017 is as follows:
Supervision Costs: Vary with direct manufacturing labor costs in each department.
Calculate the total budgeted cost of each product line (Padfolios vs. Business Cards) based on a single plant-wide overhead rate,
1 if total overhead is allocated based on total direct costs.
(Direct costs should be traced to the products as identified above. Indirect costs should be allocated to the products based on a
single overhead allocation rate.)
Budgeted OH Pool OH Pool Amount Alloc Base Allocation Rate Alloc Base
Overhead Rate Description Amount Description
OH Rate 1
Calculate the budgeted cost of each product line (Padfolios vs. Business Cards) based on departmental overhead rates, where:
2 (a) Forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department, and
(b) Assembly department overhead costs are allocated based on total direct costs of the assembly department.
(Direct costs should be traced to the products as identified above. Indirect costs should be allocated to the products based on
two overhead allocation rates -- one for each department.)
Calculate the budgeted cost of each product line (Padfolios vs. Business Cards) if Quinnipiac Padfolio Club allocates overhead
3 costs in each department using activity-based costing. (i.e. Each type of overhead in each department is allocated using the
relevant activity in the department.)
(Direct costs should be traced to the products as identified above. Indirect costs should be allocated to the products based on
four overhead allocation rates -- one for each activity.)