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Answer the following questions using the information below:

Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:

Cost Pool	Overhead Costs	Cost driver	Activity level
Supervision of direct labour	$320,000	Direct labour hours	800,000
Machine maintenance	$120,000	Machine hours	960,000
Facility rent	$200,000	Square metres of area	100,000
Total overhead costs	$640,000

The accounting records show the Mossman Job consumed the following resources:

Cost driver	Actual level
Direct labour-hours	200
Machine-hours	1,600
Square metres of area	50

Required:

1. If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job?

Answer-

1. What is the activity rate for machine maintenance costs?

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1. If Gregory Enterprises uses an ABC system then what amount of indirect costs will be allocated to the Mossman job?

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1. When selling prices are based on costs assigned using the single cost driver, direct labour hours, then would the Mossman job be overbilled or underbilled

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1. What are the benefits of ABC

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