appropriate cost drivers-
a. fringe benefits = on the basis of direct labor
b. indirect material = on the basis of direct material
fringe benefits-
| house |
allocation rate |
* |
weight of base |
= |
allocated cost |
| 1 |
65000/353000*100=18.41% |
* |
70600 |
= |
12997.46 |
| 2 |
99000/353000*100=28.05% |
* |
70600 |
= |
19803.30 |
| 3 |
189000/353000*100=53.54% |
* |
70600 |
= |
37799.24 |
| total |
|
* |
|
= |
70600 |
indirect material-
| house |
allocation rate |
* |
weight of base |
= |
allocated cost |
| 1 |
98000/422000*100=23.22% |
* |
29540 |
= |
6859.188 |
| 2 |
136000/422000*100=32.23% |
* |
29540 |
= |
9520.742 |
| 3 |
188000/422000*100=44.55% |
* |
29540 |
= |
13160.070 |
| total |
|
* |
|
= |
29540 |
the cost component to determine the total cost of each
house-
| expected cost |
house 1 |
house 2 |
house 3 |
total |
| direct material |
98000 |
136000 |
188000 |
422000 |
| direct labor |
65000 |
99000 |
189000 |
353000 |
| fringe benefits |
12997.46 |
19803.30 |
37799.24 |
70600 |
| indirect material |
6859.188 |
9520.742 |
13160.070 |
29540 |
| total |
182856.648 |
264324.042 |
427959.31 |
875140 |
