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Exercise 17-14 Activity-based costing LO P3 A2 Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Rounded Edge Squared Edge Total Direct materials Direct labor Overhead (300% of direct labor cost Total cost Quantity produced Average cost per ft. (rounded) s 9,700 6,100 18,300 $34,100 $21, 600 11,900 35, 700 $69,200 31,300 18,000 54,000 $103,300 10,600 ft. 14,200 ft. $ 3.22 4.87 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following information. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Total overhead Cost s 2,160 28,840 23,000 54,000 She has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver used by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.) Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Driver Rounded Edge Squared Edge Total Direct labor cost () Machine hours $6,100 $11,900 $18,000 200 hours 32 times 700 hours 93 times 900 hours 125 times Setups (number) Required: 1. Assign these three overhead cost pools to each of the two products using ABC. Activity Overhead Cost Activity Drivers Activity Rate Supervision 2,160 18,000 Direct labor cost 12.001 % l of direct labor cost Depreciation of machinery28,840900 Machin Assembly line preparation Per machine hour Setups Per setup Activity driverOverhead assigned Rounded edge Activity rate incurred Supervision Depreciation of machinery Assembly line preparation Per machine hour Per setup Activity driverO Squared edge Activity rate Overhead assigned incurred Components 12.001% lo Supervision Depreciation of machinery Per machine hour Per setup Determine average cost per foot for each of the two products using ABC. Rounded edge Squared edge

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