QS 17-5 Computing departmental overhead rates LO P2 Rafner Manufacturing identified the following budgeted data in its two production departments. Assembly Finishing Manufacturing overhead costs $ 1,200,000 $ 600,000 Direct labor hours 12,000 DLH 20,000 DLH Machine hours 6,000 MH 16,000 MH Required: What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?

QS 17-5 Computing departmental overhead rates LO P2 Rafner Manufacturing identified the following budgeted data in its two production departments. Assembly Finishing Manufacturing overhead costs $ 1,200,000 $ 600,000 Direct labor hours 12,000 DLH 20,000 DLH Machine hours 6,000 MH 16,000 MH Required: What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours?

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Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter26: Cost Allocation And Activity-Based Costing

Section: Chapter Questions

Problem 26.3BPR: Activity-based department rate product costing and product cost distortions Big Sound Inc....

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Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
Activity-based and department rate product costing and product cost distortions Black and Blue Sports Inc. manufactures two products: snowboards and skis. The factory overhead incurred is as follows: Indirect labor 507,000 Cutting Department 156,000 Finishing Department 192,000 Total 855,000 The activity hase associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Production control 237,000 Number of production runs Materials handling 270,000 Number of moves Total 507,000 The activity-base usage quantities and units produced for the two products follow: Number o Production Runs Number of Moves Direct Labor HoursCutting Direct Labor HoursFinishing Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 315,000 and 540,000 for the Cutting and finishing departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loud-speakers. The factory overhead incurred is as follows: Indirect labor 400,400 Cutting Department 198,800 Finishing Department 114,800 Total 714,000 The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Budgeted Activity Cost Activity Base Setup 138,600 Number of setup Quality Control 261,800 Number of inspections Total 400,400 The activity-base usage quantities and units produced for the two products follow: Number o Setup Number of Inspections Direct Labor HoursSubassembly Direct Labor HoursFinal Assembly Units Produced Snowboards 430 5,000 4,000 2,000 6,000 Skis _70 2,500 2,000 4,000 6,000 Total 500 7,500 6,000 6,000 12,000 Instructions 1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 5420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. 2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). 3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. 4. Determine the total and per-unit cost assigned to each product under activity-based costing. 5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.
QS 17-5 Computing departmental overhead rates LO P2 Rafner Manufacturing identified the following budgeted data in its two production departments. Manufacturing overhead costs Direct labor hours Machine hours Assembly $1,247,500 12,500 DLH 6,500 MH Finishing $650,000 20,500 DLH 16,500 MH Required: What are the company's departmental overhead rates if the assembly department assigns overhead based on direct labor hours and the finishing department assigns overhead based on machine hours? The departmental overhead rate for Assembly Total actual manufacturing costs The departmental overhead rate for Finishing $ 0 100 $ 2.56 39
Exercise 17-11 (Algo) Computing product cost per unit using plantwide method and activity-based costing LO P1, P3 Consider the following data for two products of Vigano Manufacturing. Budgeted Cost Activity Machine setup Parts handling Quality inspections Total budgeted overhead Unit Information Units produced Direct materials cost Direct labor cost Direct labor hours Actual Activity Usage Setups Parts Inspections 1. Using a plantwide overhead rate based on 4,500 direct labor hours, compute the total product cost per unit for each product. 2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each. Required 1 Required 2 Activity Driver $ 18,000 (20 machine setups) 14,400 (16,000 parts) 21,600 (100 inspections) $ 54,000 Product A…
Exercise 17-11 (Algo) Computing product cost per unit using plantwide method and activity-based costing LO P1, P3 Consider the following data for two products of Vigano Manufacturing. Budgeted Cost Activity Machine setup Parts handling Quality inspections Total budgeted overhead Unit Information Units produced Direct materials cost Direct labor cost Direct labor hours Actual Activity Usage Setups Parts Inspections 1. Using a plantwide overhead rate based on 4,250 direct labor hours, compute the total product cost per unit for each product. 2. Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each. Required 1 Required 2 Activity Driver $ 17,000 (20 machine setups). 13,600 (16,000 parts) 20,400 (100 inspections) $ 51,000 Product A…
Chapter 8 Accounting for Factory Overhead 253 Hackers Corp. accumulated the following information for its two products, A and B. Product A Product B Total Production volume Total direct labor hours Setup cost per batch Batch size 2,000 5,000 P 1,000 100 P20,000 2. A traditional costing system would allocate set-up costs on the basis of direct labor hours. An ABC system would trace costs by spreading the cost per batch over the 1,000 20,000 P 2,000 50 P40,000 1 25,000 Total set-up cost incurred Direct labor hour-per unit P60,000 units in a batch. 19. What is the set-up cost per unit.of Product A under each costing system? Traditional ABC System a.. P4.80 P10.00 b. 2.40 10.00 C. 40.00 200.00 d. 4.80 20.00
OBJEC Exercise 4.14 Departmental Overhead Rates Mariposa, Inc., produces machine tools and currently uses a plantwide overhead rate, based on machine hours. Harry Whipple, the plant manager, has heard that departmental overhead rates. can offer significantly better cost assignments than can a plantwide rate. Mariposa has the following data for its two departments for the coming year: Department A Department B Overhead costs (expected) Normal activity (machine hours) $720,000 120,000 $180,000 60,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 2. Compute predetermined overhead rates for each department using machine hours.
QUESTION 17 ACCOUNT Work in Process-Forging Department Date Item Nov. 1 Bal., 1,200 units, 60% completed 30 Direct materials, 8,300 units 30 Direct labor 30 Factory overhead 30 Goods transferred, 2 units 30 Bal., 900 units, 70% completed Debit 124,500 18,950 20,196 Credit ? ACCOUNT NO. What is the Direct Materials Cost Per Equvalent Unit? What is the Conversion cost per equivalent unit? What is the cost of the beginning work in process completed during May? What is the cost of the ending work in process? What is the amount of the costs transfered to Finished Goods (or the next department)? Balance Debit 20,856 145,356 164,306 184,502 ? ? Credit The above information concerns production in the Forging Department for November. All direct materials are placed in process at the beginning of production. Do not use $ or commas in your answers.
QS 17-11 (Algo) Computing activity rates for activity-based costing LO P3 A manufacturer uses activity-based costing to assign overhead cost to products. Budgeted cost information for its activities follows. Activity Cost Driver Purchase orders. Budgeted Cost $ 87,400 97,050 68,550 Budgeted Activity Usage 3,800 purchase orders 4,300 square feet 50 Setups Activity Purchasing Factory services Setup Compute an activity rate for each activity. (Round your answers to 2 decimal places.) Activity Purchasing Factory services Setup Budgeted Cost 87,400 97,050 68,550 Square feet Setups $ $ $ Budgeted Activity Usage Activity Rate
ator=&inpr... 18 R Print Item Calculating Departmental Overhead Rates and Applying Overhead to Production At the beginning of the year, Glaser Company estimated the following: Assembly Testing Department Department Total Overhead $364,000 $371,280 $735,280 Direct labor hours 157,500 118,125 275,625 Machine hours 50,500 54,540 105,040 Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows: Assembly Testing Department Department Total Overhead $43,680 $44,554 $88,234 Direct labor hours 18,900 14,175 33,075 Machine hours 6,060 6,545 12,605 Required: 1. Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent. Assembly department overhead rate per direct labor hour Testing department overhead rate per machine hour Check My Work 4…
Exercise 17-17 (Algo) Using activity-based costing to allocate overhead, compute product cost and gross profit LO P3 Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly Machining $ 311,800 Machine hours (MH) 7,400 Setups 22,000 Setups 120 $ 333,800 Finishing Inspecting $ 232,000 Inspections 740 Support Purchasing $ 132,000 Purchase orders 540 Additional production information concerning its two models follows. Units and Activities Model X Model Z Units produced 2,200 4,400 Machine hours 2,200 5,200 Setups 40 80 Inspections 480 260 Purchase orders 360 180 Per Unit Model X Model Z Selling price per unit $ 415 $ 395 Direct materials cost per unit 155 115 Direct labor cost per unit 120 135 1. Compute the activity rate for each activity using…