Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $42,200; design $556,000; and construction oversight $124,200. The cost drivers and estimated use are as follows. Activities Cost Drivers Expected Use of Cost Driver/Activity

Initial concept formation Number of project changes 15

Design Square feet 138,000

Construction oversight Number of months 105

Compute the predetermined overhead rate for each activity.

Question

Marcelo Middleton

Business

16 January, 16:17

Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $42,200; design $556,000; and construction oversight $124,200. The cost drivers and estimated use are as follows. Activities Cost Drivers Expected Use of Cost Driver/Activity

Initial concept formation Number of project changes 15

Design Square feet 138,000

Construction oversight Number of months 105

Compute the predetermined overhead rate for each activity.

+2

Answers (1)

Know the Answer?

Ciara Charles · Answer 1

The predetermined overhead rate for each activity.

Activities: Initial concept formation $42,200;

Cost Drivers: Number of project changes

Expected Use of Cost Driver/Activity = 15

Predetermined overhead rate for activity = Overhead/Cost Driver = 42,200 / 15 = $2813

Activities: Design $556,000;

Cost Drivers : Square feet

Expected Use of Cost Driver/Activity = 38,000

Predetermined overhead rate for activity = Overhead/Cost Driver = 556,000 / 38,000 = $ 14.63

Activities: Construction oversight $124,200.

Cost Drivers: Number of months

Expected Use of Cost Driver/Activity = 105

Predetermined overhead rate for activity = Overhead/Cost Driver = 124,220 / 105 = 1183.04