Question

In: Accounting

ACC 650 - REVISED PROBLEM 17-26 - QUESTION #2 Celestial Artistry Company is developing departmental overhead...

ACC 650 - REVISED PROBLEM 17-26 - QUESTION #2

Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours   
for its two production departments, Finishing and Etching. The Finishing Department employs       
120 people and the Etching Department employs 60 people. Each person in these two departments   
works 1,500 hours per year. The production-related overhead costs for the Finishing Department are   
budgeted at $330,000, and the Etching Department costs are budgeted at $280,000. Two service       
departments, Maintenance and Computing, directly support the two production departments. These   
service departments have budgeted costs of $36,000 and $310,000, respectively. The production       
departments' overhead rates cannot be determined until the service departments' costs are allocated.   
The following schedule reflects the use of the Maintenance Department's and Computing Department's   
output by the various departments.

Using Department
Service Department Maintenance Computing Finishing Etching
Maintenance (maintenance hours) - 2,000 9,000 3,000
Computing (minutes) 180,000 - 130,000 620,000

REQUIRED:

2. Use the step-down method to allocate service department costs. Allocate the Computing department's costs first. Calculate the overhead rates per direct-labor hour for the Finishing Department and the Etching Department.

Solutions

Expert Solution

Maintenance

Computing

Finishing

Etching

Overhead Costs

$         36,000

$       310,000

$       330,000

$        280,000

Allocation of Computing Department Overhead Costs

60,000

($310,000 x 180,000 / 930,000)

(310,000)

43,333

($310,000 x 130,000 / 930,000)

206,667

($310,000 x 620,000 / 930,000)

Allocation of Maintenance Department Overhead Costs

(96,000)

-

72,000

($96,000 x 9,000 / 12,000)

24,000

($96,000 x 3,000 / 12,000)

Total Overheads

-

-

$       445,333

$        510,667

Direct Labor Hours

180,000 hours

(120 people x 1,500 hours)

90,000

(60 people x 1,500 hours)

Overhead Rate per Direct Labor Hour

$2.47 per hour

$5.67 per hour

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

ACC 650 - REVISED PROBLEM 17-26 - QUESTION #1 Celestial Artistry Company is developing departmental overhead...
ACC 650 - REVISED PROBLEM 17-26 - QUESTION #1 Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours    for its two production departments, Finishing and Etching. The Finishing Department employs        120 people and the Etching Department employs 60 people. Each person in these two departments    works 1,500 hours per year. The production-related overhead costs for the Finishing Department are    budgeted at $330,000, and the Etching Department costs are budgeted at $280,000. Two...
Revised Prob 17-26 Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for...
Revised Prob 17-26 Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Finishing and Etching. The Finishing Department employs 120 people and the Etching Department employs 60 people. Each person in these two departments works 1,500 hours per year. The production-related overhead costs for the Finishing Department are budgeted at $330,000, and the Etching Department costs are budgeted at $280,000. Two service departments, Maintenance and Computing, directly support the two production departments....
Revised Prob 17-26 Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for...
Revised Prob 17-26 Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Finishing and Etching. The Finishing Department employs 120 people and the Etching Department employs 60 people. Each person in these two departments works 1,500 hours per year. The production-related overhead costs for the Finishing Department are budgeted at $330,000, and the Etching Department costs are budgeted at $280,000. Two service departments, Maintenance and Computing, directly support the two production departments....
Please solve this with all steps shown Celestial Artistry Company is developing departmental overhead rates based...
Please solve this with all steps shown Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Finishing and Etching. The Finishing Department employs 120 people and the Etching Department employs 60 people. Each person in these two departments works 1,500 hours per year. The production-related overhead costs for the Finishing Department are budgeted at $330,000, and the Etching Department costs are budgeted at $280,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
PLEASE SHOW CALCULATIONS Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for...
PLEASE SHOW CALCULATIONS Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments....
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
#2 REVISED PROBLEM 13-42 ACC 650 - Management Accounting Megatronics Corporation, a massive retailer of electronic...
#2 REVISED PROBLEM 13-42 ACC 650 - Management Accounting Megatronics Corporation, a massive retailer of electronic products, is organized in four separate divisions. The four divisional managers are evaluated at year-end, and bonuses are awarded based on ROI. Last year, the company as a whole produced a 13 percent return on its investment. During the past week, management of the company’s Northeast Division was approached about the possibility of buying a competitor that had decided to redirect its retail activities....
ACC 650 - REVISED PROBLEM 7-38 - (Required 3) ■ Problem 7–38 Sales Mix and Employee...
ACC 650 - REVISED PROBLEM 7-38 - (Required 3) ■ Problem 7–38 Sales Mix and Employee Compensation; Operating Changes (LO 7-4, 7-5) 2(c). Commissions, total: $535,600 Lawrence Corporation sells two ceiling fans, Deluxe and Basic. Current sales total 66,000 units, consisting of 44,000 Deluxe units and 22,000 Basic units. Selling price and variable cost information follow. Deluxe Basic Selling Price $92 $76 Variable Cost 64 38 Salespeople currently receive flat salaries that total $350,000. Management is contemplating a change to...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT