Spinners, Co. manufactures wheel rims. The accounting office will be following ABC allocation rates for 2021. Activity Allocation Base Predetermined Overhead Allocation Rate Materials Handling Number of Parts $3.00 per part Machine Setup Number of setups $580.00 per setup Insertion Parts Number of parts $30.00 per part Finishing Finishing direct labor hours $83.00 per hour
Spinners, Co. manufactures wheel rims. The accounting office will be following ABC allocation rates for 2021. Activity Allocation Base Predetermined Overhead Allocation Rate Materials Handling Number of Parts $3.00 per part Machine Setup Number of setups $580.00 per setup Insertion Parts Number of parts $30.00 per part Finishing Finishing direct labor hours $83.00 per hour
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Spinners, Co. manufactures wheel rims. The accounting office will be following ABC allocation rates for 2021.
Expected data for 2021 are as follows:
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the total estimated indirectmanufacturing cost for 2021.
2. Compute the estimated ABC indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.
3. Prior to 2021, Spinners, Co. used a direct labor hour single plantwide overhead allocation rate system. Compute the predetermined overhead allocation rate based on direct labor hours for 2021. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model to the nearest cent.
| Activity | Allocation Base | Predetermined Overhead Allocation Rate |
|---|---|---|
| Materials Handling | Number of Parts | $3.00 per part |
| Machine Setup | Number of setups | $580.00 per setup |
| Insertion Parts | Number of parts | $30.00 per part |
| Finishing | Finishing direct labor hours | $83.00 per hour |
Spinners, Co. produces two wheel rim models: standard and deluxe.
Expected data for 2021 are as follows:
| Information | Standard | Deluxe |
|---|---|---|
| Parts per rim | 2.0 | 10.0 |
| Setups per 500 rims | 15.0 | 13.0 |
| Finishing hours per rim | 2.5 | 2.5 |
| Total direct hours per rim | 3.5 | 6.0 |
Spinners, Co. in 2021, expects to produce a total of 500 units. of each model.
(Round your answers to two decimal places when needed and use rounded answers for all future calculations).
1. Compute the total estimated indirect
| Activity | Predetermined Overhead Allocation Rate | X | Total estimated quantity of the Allocation Base Used | = | Total Estimated Overhead Cost |
|---|---|---|---|---|---|
| Materials Handling | X | = | |||
| Machine Setup | X | = | |||
| Insertion of Parts | X | = | |||
| Finishing | X | = | |||
| Total Estimated Overhead Costs |
2. Compute the estimated ABC indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.
| Standard Rims | Predetermined Overhead Allocation Rate | X | Total estimated quantity of the Allocation Base Used | = | Total Estimated Overhead Cost |
|---|---|---|---|---|---|
| Materials Handling | X | = | |||
| Machine Setup | X | = | |||
| Insertion of Parts | X | = | |||
| Finishing | X | = | |||
| Manufacturing overhead cost per rim |
| Deluxe Rims | Predetermined Overhead Allocation Rate | X | Total estimated quantity of the Allocation Base Used | = | Total Estimated Overhead Cost |
|---|---|---|---|---|---|
| Materials Handling | X | = | |||
| Machine Setup | X | = | |||
| Insertion of Parts | X | = | |||
| Finishing | X | = | |||
| Manufacturing overhead cost per rim |
3. Prior to 2021, Spinners, Co. used a direct labor hour single plantwide overhead allocation rate system. Compute the predetermined overhead allocation rate based on direct labor hours for 2021. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model to the nearest cent.
| Estimated DLHr per rim | X | Number of rims | = | Total estimated direct labor hours |
|---|---|---|---|---|
| X | = |
| Total estimated overhead cost | / | Total estimated quantity of the overhead allocation base | = | Predetermined Overhead Allocation Rate |
|---|---|---|---|---|
| / | = |
| Type of Rim | Predetermined Overhead Allocation rate | X | Actual Quantity of the Allocation Base Used | = | Allocated Manufacturing Overhead Cost |
|---|---|---|---|---|---|
| Standard Rims | X | = | |||
| Deluxe Rims | X | = |
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Step 1: Activity-based costing:
VIEWStep 2: (1) Compute the total estimated indirect manufacturing cost for 2021:
VIEWStep 3: (2) Compute the estimated ABC indirect manufacturing cost per unit of each model:
VIEWStep 4: (3) Compute the predetermined overhead allocation rate and estimated indirect manufacturing cost:
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