The management of Garn Corporation would Ilike to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated activity for the coming year. The Corporation's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated activity for the upcoming year is 69,000 machine-hours. Capacity is 85,000 machine-hours. All of the manufacturing overhead is fixed and is $4,105,500 per year within the range of 69,000 to 85,000 machine-hours. If the Corporation bases its predetermined overhead rate on capacity but the actual level of activity for the year turns out to be 69,700 machine-hours, the cost of unused capacity shown on the income statement prepared for internal management purposes would be closest to: Multiple Choice $772,800 $780,640 S738.990 $41,650

Let's suppose that you are making automobiles. In July there is a plant shutdown for two weeks. Factory labor, both direct (production line workers) and indirect (factory supervisor), take mandatory vacation during those two weeks.   Explain, the mechanics of calculating a Predetermined Overhead Rate for this year. Which allocation base (or bases) may be used to apply overhead cost to the automobiles produced?   Should the cost of the factory labor vacations be spread to all automobiles produced during the entire year?   Would the cost of the vacations for the Sales and Human Resource departments also be allocated to the automobiles?  What cost type of cost are these as compared to the factory worker vacation costs? How do vacation costs for Sales and HR departments flow through the Income Statement?

Tasman Products, Limited, of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine- hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other "Budgeted at $20 per machine-hour. Data for the Forming and Assembly Departments follow: Forming Department Assembly Department Total Budget $ 312,000 $ 206,000 Percentage of Peak- Period Capacity Required 73% 27% 100% Actual $ 399,600 $ 221,600 Machine-Hours Budget 10,400 5,200 15,600 Actual 12,400 4,200 16,600 The level of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 1. How much Maintenance Department cost should be charged to the Forming…

Crane is an electronics components manufacturer. Information about the company's two products follows: AM-2 FM-9 Units produced 20,000 4,000 Direct labor hours required for production 10,000 15,000 Units per batch 4,000 400 Shipping weight per unit 0.50 Ibs. 10 Ibs. The company incurs $786,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours.

At the start of the year, Vencor Company estimated manufacturing overhead to be $2,000,000. Eighty percent of the overhead is fixed and relates to depreciation of equipment. The remaining 20 percent is variable. The company estimated machine hours to be 100,000 and thus used a predetermined overhead rate of $20 per machine hour. During the year, the company devised a new way to sequence movements of material among the machines, which resulted in a savings of 30,000 machine hours. Estimate the amount of manufacturing overhead that the company would save related to the reduction in machine hours. Why is the savings less than $20 per machine 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

Maxey & Sons manufactures two types of storage cabinets—Type A and Type B—and applies manufacturing overhead to all units at the rate of $120 per machine hour. Production information follows.       Type A    Type BAnticipated volume (units)         24,000              45,000     Direct-material cost per unit    $    28         $    42     Direct-labor cost per unit         33              33      The controller, who is studying the use of activity-based costing, has determined that the firm’s overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities’ three respective cost drivers, follow.       Type A    Type B    TotalSetups         140              100              240     Machine hours         48,000              67,500              115,500     Outgoing shipments         200              150              350      The firm’s total…

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Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Multiple Choice Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 2 direct labor hour and 3.30 machine hours in the Assembly Department, and 4.50 direct labor hours and 0.4 machine hours in the Finishing Department? O$17.60. Assembly 180,000 DLH 380,000 MH $380,000 $20.40. Finishing 148,000 DLH 91, 200 MH $562, 400

A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows:  Machine Cost A $ 60,000 B $ 50,000 C $ 60,000   Product forecasts and processing times on the machines are as follows:        PROCCESSING TIME PER UNIT (minutes) Product AnnualDemand   A B C 1 16,000   3 4 4 2 10,000   6 5 1 3 15,000   1 3 6 4 17,000   5 3 4   a. Assume that only purchasing costs are being considered. Compute the total processing time required for each machine type to meet demand, how many of each machine type would be needed, and the resulting total purchasing cost for each machine type. The machines will operate 10 hours a day, 240 days a year. (Enter total processing times as whole numbers. Round up machine quantities to the next higher whole number. Compute total purchasing costs using these rounded machine quantities. Enter the resulting total purchasing cost as a whole number. Omit the "$" sign.)  Total…