Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. The following information is available regarding activity cost pools, cost drivers, total estimated overhead costs, and estimated use of activities per product: Activity Cost Pool Cost Driver Ordering and Receiving Machine Setup Machining Assembly Inspection Orders Setups Machine hours Parts Est. Overhead $ 120,000 297,000 1,500,000 1,200,000 Inspections 300,000 Cost Driver Activity. 500 orders 450 setups 125,000 MH 1,000,000 parts 500 inspections If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is
Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. The following information is available regarding activity cost pools, cost drivers, total estimated overhead costs, and estimated use of activities per product: Activity Cost Pool Cost Driver Ordering and Receiving Machine Setup Machining Assembly Inspection Orders Setups Machine hours Parts Est. Overhead $ 120,000 297,000 1,500,000 1,200,000 Inspections 300,000 Cost Driver Activity. 500 orders 450 setups 125,000 MH 1,000,000 parts 500 inspections If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is
Chapter1: Financial Statements And Business Decisions
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Tidwell Industries has the following overhead costs and cost drivers. Direct labor
hours are estimated at 100,000 for the year. The following information is available
regarding activity cost pools, cost drivers, total estimated overhead costs, and
estimated use of activities per product:
Activity Cost Pool Cost Driver
Ordering and
Receiving
Machine Setup
Machining
Assembly
Inspection
A) $34.17.
B) $12.00.
Orders
Setups
Machine
C) $15.00.
Est.
Overhead
$ 120,000
297,000
1,500,000
1,200,000
Inspections 300,000
hours
Parts
Cost Driver Activity
500 orders
If overhead is applied using traditional costing based on direct labor hours, the
overhead application rate is
450 setups
125,000 MH
1,000,000 parts
500 inspections
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