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.

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Bruce Sharp

10 July, 19:27

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.

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Nicolas · 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