,owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incursattache in ss belowthankslast partrwiowrhw More infoThe Bergeron's plant completed Jobs 450 and 455 on May 15. Both jobsincurred a total of 7 DL hours throughout the entire production process. Job 450incurred 2 MH in the Machining Department and 6 DL hours in the FinishingDepartment (the other DL hour occurred in the Machining Department). Job 455incurred 6 MH in the Machining Department and 5 DL hours in the FinishingDepartment (the other two DL hours occurred in the Machining Department).PrintDoneXRequirements1. Compute the plantwide overhead rate assuming that Bergeron's expects to incur 25,000 total DLhours during the year.2. Compute departmental overhead rates assuming that Bergeron's expects to incur 14,800 MH inthe Machining Department and 18,000 DL hours in the Finishing Department during the year.3. If Bergeron's continues to use the plantwide overhead rate, how much manufacturing overheadwould be allocated to Job 450 and Job 455?4. If Bergeron's uses departmental overhead rates, how much manufacturing overhead would beallocated to Job 450 and Job 455?5. Based on your answers to Requirements 3 and 4, does the plantwide overhead rate overcost orundercost either job? Explain. If Bergeron's sells its furniture at 125% of cost, will its choice ofallocation systems affect product pricing? Explain.X Bergeron's Fine Furnishings manufactures upscale custom furniture. Bergeron's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,450,000 of manufacturing overhead to individual jobs. However, Donna Donaldson, owner and CEO, is considering refiningthe company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $730,000 of manufacturingmanufacturing overheadt driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing De overhead while the Finishing Department incurs $720,000 of manufacturing overhead. Donaldson has identified machine hours (MH) as the primary(Click the icon to view the job information.)Read the equirementFirst identify the formula, then compute the rate. (Round your answer to the nearest whole dollar.)Total manufacturing overheadCost allocation base (estimated)+25,0001,450,000SMachiningFinishingRequirement 2. Compute departmental overhead rates assuming that Bergeron's expects to incur 14,800 MH in the Machining Department and 16,000 DL hours in the Finishing Department during the year.First identify the formula, then compute the rate for each department. (Round your answers to the nearest whole dollar.)$$Job 450Job 455Total department overhead730,000720,000+Plantwide overhead rate5858MachiningFinishingTotal overhead allocation= Plantwide overhead rate= $58Cost allocation base (estimated)14,60016,000XXRequirement 3. If Bergeron's continues to use the plantwide overhead rate, how much manufacturing overhead would be allocated to Job 450 and Job 455?First identify the formula, then calculate the amount of manufacturing overhead that would be allocated to the jobs if the plantwide overhead rate is used. (Round your answers to the nearest whole dollar.)Manufacturing overhead=Actual use of allocation base77= $ 50S= $ 45Departmentaloverhead rate== S=Sper mach. hourper DL hourCallocated406406Requirement 4. If Bergeron's uses departmental overhead rates, how much manufacturing overhead would be allocated to Job 450 and Job 455?Use the following table to calculate the amount of manufacturing overhead that would be allocated to the jobs if the departmental overhead rates are used. (Round your answers to the nearest whole dollar.)Job 455Job 450

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Description: ,owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incursattache in ss belowthankslast partrwiowrhw More infoThe Bergeron's plant completed Jobs 450 and 4

Overhead costs are the sum of all indirect product costs which are incurred during the production…

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Bergeron's Fine Furnishings manufactures upscale custom furniture. Bergeron's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,450,000 of manufacturing overhead to individual jobs. However, Donna Donaldson, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $730,000 of manufacturing overhead while the Finishing Department incurs $720,000 of manufacturing overhead. Donaldson has identified machine hours (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing Department.

Bergeron's Fine Furnishings manufactures upscale custom furniture. Bergeron's currently uses a plantwide overhead rate based on direct labor hours to allocate its $1,450,000 of manufacturing overhead to individual jobs. However, Donna Donaldson, owner and CEO, is considering refining the company's costing system by using departmental overhead rates. Currently, the Machining Department incurs $730,000 of manufacturing overhead while the Finishing Department incurs $720,000 of manufacturing overhead. Donaldson has identified machine hours (MH) as the primary manufacturing overhead cost driver in the Machining Department and direct labor (DL) hours as the primary cost driver in the Finishing Department.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Objective: Consider that you are an analyst at Regeneron Pharmaceuticals. You need to decide how to allocate administrative overhead costs to Regeneron's main commercial products (Eylea, Dupixent, Kevzara and Praluent). Determine how to appropriately allocate the costs in the table below to each of the commercial products using an allocation methodology of your choice. Department2019 Annual Operating ExpenseTime spent supporting Commercial productsCommercial$200MM100%IT$100MM25%Facilities$150MM0%Finance$25MM20%Human Resources$75MM10% Use the supporting document Net Product Sales of REGN Products to facilitate your analysis. Provide a written summary of how you allocated the overhead costs to each product in an outline of no more than one page. As a starting point, it's recommended that you revisit the material we covered in Chapter 12. Guidance on calculations:Start off with Net Product Sales of REGN Products. Your objective pertains to 2019 expenses, so you should be reviewing 2019…
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XYZ Co.currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components .(PC) as cost drivers. Data on the cost pools and respective driver volumes follow Pool No.1 (Driver: DLH) Pool No. 3 (Driver: PC) Pool No. 2 (Driver: SU) Product 2,250 55 1,200 Zeta 750 45 2,800 Beta $360,000 $280,000 $160,000 Pool Cost :The overhead cost allocated to Beta by using activity-based costing procedures would be $356,000 a O $328,000 .b O .None of the given answers .c O $444,000 .d O $472,000 .e O
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