Calculate activity rate for general factory overhead using direct labor hours.How much of the $2,496,500 manufacturing overhead would be allocated to the Delta product?How much would be allocated to the sigma product? has the following estimates for 2019:EstimatedExpectedActivity50,000 MHsActivity Cost Pool Activity MeasureMachine related machine hoursMachine setups number of setupsPurchase orders number of ordersGeneral factory direct labor hoursOverhead Cost$1,500,000$300,000$192,500$504,000$2,496,500750 setups3,500 orders36,000 DLHSTotalsActivity Measuremachine hoursProduct DeltaProduct Sigma28,00035022,000400number of setupsnumber of orders1,9001,600direct labor hours.20,00016,000

Activity-Based Costing: It is the method of costing which is used to assign indirect costs to the…

Calculate activity rate for general factory overhead using direct labor hours. How much of the $2,496,500 manufacturing overhead would be allocated to the Delta product? How much would be allocated to the sigma product?

Calculate activity rate for general factory overhead using direct labor hours. How much of the $2,496,500 manufacturing overhead would be allocated to the Delta product? How much would be allocated to the sigma product?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 1CE: The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:...

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The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express the companys maintenance costs as an equation where x represents the gallons of paint produced. Then estimate the fixed and variable costs. Predict the maintenance costs i190,000 gallons of paint are produced. Predict the maintenance costs if 81,000 gallons of paint are produced. Using Excel, create a scatter graph of the cost data and explain the relationship between gallons of paint produced and equipment maintenance expenses.
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include: Fixed costs (salaries, tools): 64,900 per year Variable costs (supplies): 1.35 per maintenance hour Estimated usage by: Actual usage by: Required: 1. Calculate a single charging rate for the Maintenance Department. 2. Use this rate to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year. 3. What if the Assembly Department used 4,000 maintenance hours in the year? How much would have been charged out to the three departments?
Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?
Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.
Fulcrum Industries manufactures dining chairs and tables. The following information is available in December 2020: Dining Chairs Tables Total CostMachine setups 200 600 $48,000Inspections 250 470 $72,000Labor hours 2,600 2,400 Fulcrum is considering switching from one overhead rate based on labor hours to activity-based costing.InstructionsPerform the following analyses for these two components of overhead:a. Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.b. Compute total machine setups and inspection costs assigned to each product, using activity-based costing.c. Comment on your findings.
Accounting Question
The Pangasinan plant of the Pilipinas Company manufactures cash registers. It plansto implement an activity-based costing system. The controller has prepared thefollowing estimates regarding cost pools and activity levels for the next year.Cost PoolActivity CostsActivity driver levelsElectricityP100,00040,000 kwhMachine setups300,0001,500 setup hoursMaterial moves80,00040,000 movesQuality inspections120,00030,000 inspectionsTotalP600,000The plant’s present cost accounting system allocates manufacturing overhead to jobs using aplant-wide overhead rate based on machine hours. The total machine hours for the comingyear are estimated to be 100,000 hours.The company has received a request for a bid to deliver 2,000 units of its cash register modelMAI. The following estimates pertain to the production of 2,000 units of MAI:Direct materials costP30,000Direct labor (P10/hour)P15,000Machine hours2,000Setup hours50Electricity (Kwh)2.000Number of quality inspections500Number of material…
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year. Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $480,000 Number of setups 600 Ordering costs 360,000 Number of orders 18,000 Machine costs 840,000 Machine hours 42,000 Receiving 400,000 Receiving hours 10,000 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $600,000 $800,000 Direct labor $480,000 $480,000 Units completed 16,000 8,000 Direct labor hours 6,000 2,000 Number of setups 400 200 Number of orders 6,000 12,000 Machine hours 24,000 18,000 Receiving hours 3,000 7,000 The company's normal activity is 8,000 direct labor hours. Required: Determine the unit cost for each model using direct labor hours to…
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment Number of setups Ordering costs Number of orders Machine costs Receiving Direct materials Direct labor Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Units completed Direct labor hours Number of setups Number of orders $627,000 481,000 16,200 6,400 370 5,800 24,900 3,700 The company's normal activity is 7,900 direct labor hours. Machine hours Receiving hours Required: Model A Model B $482,510 372,000 864,000 410,000 Receiving hours Model A Machine hours $ del B Model B Unit Cost $836,000 497,000 8,500 1,500 240 1. Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent. 12,800 18,300 6,300 610 18,600 43,200 10,000 2. Determine the unit cost for…
Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for the upcoming year for the given activity cost pools: Fabrication Finishing Department Department Cost Driver $ 30,000 15,000 Machine hours 22,500 Material moves 45,000 105,000 7,500 Machine setups 37,500 Inspection hours Total $180,000 $82,500 The following activity predictions were also made for the year: Maintenance Materials handling Machine Inspections Fabrication Finishing Department Department 5,000 2,500 1,500 750 25 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering switching to either department rates of activity-based rates: The production manager has provided the…
Activity-Based Costing Slack Corporation has the following predicted indirect costs and cost drivers for the year for the given activity cost pools: Maintenance Materials handling Machine setups Inspections Machine hours Material moves Machine setups Inspection hours Fabrication Department Finishing Department Cost Driver $50,000 30,000 70,000 $40,000 Machine hours 15,000 Material moves 5,000 Machine setups 25,000 Inspection hours $85,000 The following activity predictions were also made for the year. Fabrication Department Finishing Department Direct materials cost Direct labor cost Machine hours (Fabrication) Machine hours (Finishing) Materials moves Machine setups Inspection hours It is assumed that the cost per unit of activity for a given activity does not vary between departments. Slack's president, Charles Slack, is trying to evaluate the company's product mix strategy regardin two of its five product models, ZX300 and SL500. The company has been using a company-wide overhead…