Question

The Thompson Company uses activity-based costing to determine product cost. Three activities and their rates have been calculated as shown below.

Setting up equipment = $500 per setup
Moving goods = $20 per move
Machining = $4 per machine hour

Thompson provided the following data from the job order cost sheet for Job #345

Direct materials
$2,000
Direct labor
1,800
Setups
1
Moves
30
Machine hours
900

A. Calculate the overhead applied to Job #345.
B. Calculate the total cost of Job #345.
C. If price is calculated by applying a 30% markup on cost, what is the price for Job #345?
D. Assume Job #345 required 2 setups, 15 moves, and 700 machine hours. Calculate the overhead applied to Job #345.
E. Assuming a 50% markup on cost, what is the price of Job #345 using the overhead rate calculated in part D.