Prepare an action analysis report in good form of a job that involves painting 69 square meters and…
Jardon Painting paints the interiors and exteriors of homes and commercial buildings. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing
Activity Cost Pool
Activity Measure
Annual Activity
Painting overhead
Square meters
10,000 square meters
Job support
Jobs
200 jobs
Other
None
Not applicable
The “Other” activity cost pool consists of the costs of idle capacity and organization sustaining costs.
The company has already finished the first stage of the allocation process in which costs were allocated to the activity cost centers. The results are listed below:
Job
Painting
Support
Other
Total
Painting overhead
$ 99,000
$ 77,000
$44,000
$220,000
Office expense
14,000
84,000
42,000
140,000
Total
$113,000
$161,000
$86,000
$360,000
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the Painting and Job Support activity cost pools by filling in the table below. Round off all calculations to the nearest whole cent.
Job
Painting
Support
Painting overhead
Office expense
Total
b. Prepare an action analysis report in good form of a job that involves painting 69 square meters and has direct materials and direct labor cost of $2,190. The sales revenue from this job is $3,400. For purposes of this action analysis report, direct materials and direct labor should be classified as a Green cost; painting overhead as a Red cost; and office expense as a Yellow cost.