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Andersen Grocery is trying to calculate costs in several departments. They have the following cost data available:
| | Produce | Frozen | Deli | Total |
| # of Items Sold | 25,000 | 225,000 | 62,500 | 312,500 |
| # of Purchase Orders | 300 | 700 | 600 | 1,600 |
| # of Deliveries | 250 | 1,500 | 750 | 2,500 |
| Hours of Shelf Time | 1,000 | 5,000 | 4,000 | 10,000 |
Currently overhead costs are allocated based on the number of items sold (one cost pool). Overhead costs are as follows:
Ordering Costs: $50,000
Delivery Costs $200,000
Shelf Stocking Costs $150,000
Total Budgeted Overhead Costs $400,000
Required
- Allocate the total overhead among the three departments using one pool using number of items sold.
- Allocate the overhead between the three departments using ABC costing as follows:
- Allocate ordering costs based on the number of purchase orders
- Allocate delivery costs based on the number of deliveries
- Allocate shelf stocking costs based on the number of hours of shelf stocking
| Overhead Rate One Pool (# of items sold) | |
| | |
| Overhead Rate Ordering Costs | |
| Overhead Rate Delivery Costs | |
| Overhead Rate Shelf Stocking Costs | |
Allocation of Overhead
| | Produce | Frozen | Deli | Total |
| Allocation of Overhead One Pool | | | | |
| | | | | |
| Allocation of Ordering Costs | | | | |
| Allocation of Delivery Costs | | | | |
| Allocation of shelf Stocking Costs | | | | |
| | | | | |
| Total Overhead Costs | | | | |
Answer & Explanation
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