BM2021

Name: Section: BSA601 Date:

TASK PERFORMANCE
Blue Furniture
Blue Furniture has identified activity centers to which overhead costs are assigned. The company’s
combined direct labor hours for chairs, cabinets, and tables (job batch #732) are 500 hours. The
following data is available:

Activity Centers Costs Activity Drivers

Utilities P500,000 50,000 machine hours
Scheduling and Setup 480,000 800 setups
Material Handling 931,000 1,900,000 pounds of materials

The company’s estimated products and annual operating statistics are the following:

A. Chairs B. Cabinets C. Tables

Prime costs P160,000 P140,000 P180,000
Machine hours 20,000 15,000 15,000
Number of setups 150 250 400
Pounds of materials 600,000 500,000 800,000
Number of units produced 65,000 55,000 70,000
Direct labor hours 45,000 36,000 60,000

Provide the following: (2 items x 50 points)

A. Compute for the pool rates and overhead cost allocated to each product of Blue Furniture.
Step 1. Determine the Pool Rates by dividing the given costs to the activity drivers:

Activity Centers Solution Pool rates

Utilities P 500,000/50,000 P 10/mhr.
Scheduling & setup P 480,000/800 P 600/set up
Materials handling P 931,000/1,900,000 P 0.49/lb.

Step 2. Determine the Overhead cost allocated by multiplying the activity centers by the cost
of activity drivers using the computed pool rates:

Product A Product B Product C Total

Chairs Cabinets Tables
Utilities
A. 20,000 x P 10 P 200,000
B. 15,000 x P 10 P 150,000
C. 15,000 x P 10 P 150,000
P 500,000
Scheduling and setup
A. 150 x P 600 P 90,000
B. 250 x P 600 P 150,000

06 Task Performance 1 *Property

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 BM2021

Name: Section: BSA601 Date:

C. 400 x P 600 P 240,000

P 480,000
Material handling
A. 600,000 x P .49 P 294,000
B. 500,000 x P .49 P 245,000
C. 800,000 x P .49 P 392,000
P 931,000
TOTAL P 584,000 P 545,000 P 782,000 P 1,911,000

B. Using the allocated total overhead cost in the previous item, as the budgeted annual
overhead, compute for the combined overhead cost applied to job #732. Show your solution
using normal costing and illustrate the journal entry of the calculated overhead cost.

Direct Labor hours

Product A (Chairs) 45,000
Product B (Cabinets) 36,000
Product C (Tables) 60,000
TOTAL 141,000

Budgeted factory overhead

Predetermined Overhead Rate=
Budgeted direct labor hours

P 1,911,000
Predetermined Overhead Rate=
141,000

Predetermined Overhead Rate=P 13.55 per direct labor hour

The overhead cost applied to Job#732 is P 6,776.596 (500 hours x P 13.55 per direct labor
hour)

Work-in-Process Inventory P 6,776.596

Factory Overhead P 6,776.596

Rubric for grading:

CRITERIA POINTS
Complete solution with correct answer 50
Last two (2) major steps of the solution are incorrect 40
Half of the solution is correct 30
First two (2) major steps of the solution are correct 20
The first major step of the solution is correct 10

06 Task Performance 1 *Property

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