Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Estimated wheels produced Direct labor hours per wheel Activity Cost Pools Setting up machines Assembling Inspection Car Total estimated overhead costs for the two product lines are $835,200. Assembling 39,000 11,000 Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs Setting up machines S Inspection Truck 1 Estimated Use of Cost Drivers 1.000 setups 72.000 labor hours 1.200 inspections S 3 Compute the activity-based overhead rates for these three cost pools Estimated Overhead Overhead Rates Costs $216,000 360,000 259,200

Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Estimated wheels produced Direct labor hours per wheel Activity Cost Pools Setting up machines Assembling Inspection Car Total estimated overhead costs for the two product lines are $835,200. Assembling 39,000 11,000 Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs Setting up machines S Inspection Truck 1 Estimated Use of Cost Drivers 1.000 setups 72.000 labor hours 1.200 inspections S 3 Compute the activity-based overhead rates for these three cost pools Estimated Overhead Overhead Rates Costs $216,000 360,000 259,200

Name: Altex Inc. manufactures two products: car wheels and truck wheels. To
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each productline, the controller, Robert Hermann, has developed the following information.Estimated wheels producedDirect labor hours

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 24E: Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs....

See similar textbooks

Similar questions

Brees, Inc., a manufacturer of golf carts, has just received an offer from a supplier to provide 2,600 units of a component used in its main product. The component is a track assembly that is currently produced internally. The supplier has offered to sell the track assembly for 66 per unit. Brees is currently using a traditional, unit-based costing system that assigns overhead to jobs on the basis of direct labor hours. The estimated traditional full cost of producing the track assembly is as follows: Prior to making a decision, the companys CEO commissioned a special study to see whether there would be any decrease in the fixed overhead costs. The results of the study revealed the following: 3 setups1,160 each (The setups would be avoided, and total spending could be reduced by 1,160 per setup.) One half-time inspector is needed. The company already uses part-time inspectors hired through a temporary employment agency. The yearly cost of the part-time inspectors for the track assembly operation is 12,300 and could be totally avoided if the part were purchased. Engineering work: 470 hours, 45/hour. (Although the work decreases by 470 hours, the engineer assigned to the track assembly line also spends time on other products, and there would be no reduction in his salary.) 75 fewer material moves at 30 per move. Required: 1. Ignore the special study, and determine whether the track assembly should be produced internally or purchased from the supplier. 2. Now, using the special study data, repeat the analysis. 3. Discuss the qualitative factors that would affect the decision, including strategic implications. 4. After reviewing the special study, the controller made the following remark: This study ignores the additional activity demands that purchasing would cause. For example, although the demand for inspecting the part on the production floor decreases, we may need to inspect the incoming parts in the receiving area. Will we actually save any inspection costs? Is the controller right?
Qriole Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, William Brown, has developed the following information: Estimated wheels produced Direct labour hours per wheel Car Car wheels $ Truck 45,000 11,000 4 Total estimated overhead costs for the two product lines are $1,340,000. Calculate the overhead cost assigned to the car wheels and truck wheels, assuming that direct labour hours are used to allocate overhead costs. 8 180,000
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Car Truck Estimated wheels produced 36,000 15,000 Direct labor hours per wheel 3 Total estimated overhead costs for the two product lines are $ 858,600. Your answer is incorrect. Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Overhead rate $ 10.60 per direct labor hour eTextbook and Media Solution X Your answer is incorrect. Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Car wheels 36000 Truck wheels 45000 %24
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Car Truck Estimated wheels produced 36,000 15,000 Direct labor hours per wheel 1 3 Total estimated overhead costs for the two product lines are $858,600. Your answer is incorrect. Try again. Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Overhead rate $enter a dollar amount per direct labor hour rounded to 2 decimal places per direct labor hour LINK TO TEXT LINK TO VIDEO Your answer is incorrect. Try again. Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Car wheels…
Dartmouth Corporation manufactures two models of motorized go−carts, a standard and a deluxe model. The following activity and cost information has been compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 17 6 790 Deluxe 31 15 400 Overhead Costs $18,240 $21,000 Assume a traditional costing system applies the $39,240 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Estimated wheels produced Direct labor hours per wheel (a1) Your answer is incorrect. Car 40,000 Overhead rate $ 1 Total estimated overhead costs for the two product lines are $846,800. Truck 11,000 Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) 1 per direct labor hour
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has to overhead of $132,720. Carlise has identified the following information about its overhead activity cost pools and the two product lines: Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Activity Cost Pools Cost Driver Materials handling Number of moves Quality control Number of inspections Machine maintenance Number of machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Indoor Model Outdoor Model Total Cost Assigned to Pool $21, 120 $71,760 4,600 inspections $39,840 29,000 machine hours 19,000 machine hours 600 moves 500 moves 5,800 inspections Overhead Assigned
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Estimated wheels produced Direct labor hours per wheel (al) Your answer is correct. Overhead rate $ eTextbook and Media (a2) Total estimated overhead costs for the two product lines are $752,600. Car Car wheels 41,000 Calculate overhead rate. (Round answer to 2 decimal places, eg 12.25) $ 1 Truck wheels $ Truck 10,000 3 Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. 10.60 per direct labor hour Attempts: 1 of 5 used
Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Estimated Use ofCost Drivers Estimated OverheadCosts Setting up machines 1,000 setups $216,000 Assembling 72,000 labor hours 360,000 Inspection 1,200 inspections 259,200 Compute the activity-based overhead rates for these three cost pools.
Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Setting up machines Assembling Inspection Setting up machines Assembling Inspection $228,000 380,000 273,600 Compute the activity-based overhead rates for these three cost pools. Estimated Overhead Costs A tA Estimated Use of Cost Drivers 1,000 setups 76,000 labor hours 1,200 inspections Overhead Rates /setup /DLH /inspection
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $138,525 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Cost Assigned to Pool Quantity or Amount. Consumed by Basic 17 moves Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Required 1 Required: 1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. Complete this question by entering your answers in the tabs below. Required 2 4. Determine the amount of overhead Hazelnut will assign to the luxury…
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $171,500 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Required: 1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. Required 1 Cost Driver Number of moves Number of inspections Number of machine hours 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?…