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Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs:
Setup (1,000 setup hours) $118,000
Production scheduling (400 batches) 30,000
Production engineering (60 change orders) 90,000
Supervision (2,000 direct labor hours)
64,000 Machine maintenance (12,000 machine hours)
84,000 Total activity costs $386,000
The following additional data were provided for Job 845: Direct materials costs $7,000 Direct labor cost (5 Milling direct labor hours;35 Finishing direct labor hours) $1,000 Setup hours 5 hours Production scheduling 1 batch Machine hours used (25 Milling machine hours;5 Finishing machine hours) 30 hours Production engineering 3 change orders
(a) Calculate the cost per unit of activity driver for each activity cost category. Setup $ Answer Production scheduling $ Answer Production engineering $ Answer Supervision $ Answer Machine maintenance $ Answer
(b) Calculate the cost of Job 845 using ABC to assign the overhead costs. $ Answer
(c) Calculate the cost of Job 845 using the plantwide overhead rate based on machine hours. (Round your answer to the nearest dollar.) $ Answer
(d) Calculate the cost of Job 845 using a machine hour departmental overhead rate for the Milling Department ($31 per hour) and a direct hour overhead rate for the Finishing Department ($101 per hour). (Round your answer to the nearest dollar.) $ Answer
Solutions
Expert Solution
1.
| Setup ($118,000/1,000) | $118 | per setup hours |
| Production scheduling ($30,000/400) | 75 | per batch |
| Production engineering ($90,000/60) | 1,500 | per change order |
| Supervision (64,000/2,000) | 32 | per direct labor hour |
| Machine maintenance (84,000/12,000) | 7 | per machine hour |
2.
| Job 845 | ||
| Direct material | $7,000 | |
| Direct labor | 1,000 | |
| Overhead: | ||
| Setup (5*$118) | $590 | |
| Production scheduling (1*$75) | 75 | |
| Production engineering (3*$1,500) | 4,500 | |
| Supervision (40*$32) | 1,280 | |
| Machine maintenance (30*$7) | 210 | 6,655 |
| Total cost | $14,655 |
3.
Plant-wide overhead rate = Estimated total manufacturing overhead cost / Estimated machine hours
Plant-wide overhead rate = $386,000 / 12,000 = $32.17
| Job 845 | |
| Direct material | $7,000 |
| Direct labor | 1,000 |
| Overhead (30*$32.17) | 965 |
| Total cost | $8,965 |
4.
| Job 845 | ||
| Direct material | $7,000 | |
| Direct labor | 1,000 | |
| Overhead: | ||
| Milling department (25*$31) | $775 | |
| Finishing department (35*$101) | 3,535 | 4,310 |
| Total cost | $12,310 |
ekkarill92 answered 2 years agoRelated Solutions
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...
Calculating Activity-Based Costing Overhead Rates
Assume that manufacturing overhead for Goldratt Company consisted
of the following activities and costs:
Setup (1,000 setup hours)
$150,000
Production scheduling (400 batches)
80,000
Production engineering (60 change orders)
60,000
Supervision (2,000 direct labor hours)
66,000
Machine maintenance (12,000 machine hours)
48,000
Total activity costs
$404,000
The following additional data were provided for Job 845:
Direct materials costs
$7,000
Direct labor cost (5 Milling direct labor hours;35 Finishing
direct labor hours)
$1,000
Setup hours
5...
Calculating Activity-Based Costing Overhead Rates Assume that manufacturing overhead for Goldratt Company consisted of the following...
Calculating Activity-Based Costing Overhead Rates
Assume that manufacturing overhead for Goldratt Company consisted
of the following activities and costs:
Setup (1,000 setup hours)
$150,000
Production scheduling (400 batches)
80,000
Production engineering (60 change orders)
60,000
Supervision (2,000 direct labor hours)
66,000
Machine maintenance (12,000 machine hours)
48,000
Total activity costs
$404,000
The following additional data were provided for Job 845:
Direct materials costs
$7,000
Direct labor cost (5 Milling direct labor hours;35 Finishing
direct labor hours)
$1,000
Setup hours
5...
Assume that manufacturing overhead for Goldratt Company consisted of the following activities and costs: Setup (1,000...
Assume that manufacturing overhead for Goldratt Company
consisted of the following activities and costs:
Setup (1,000 setup hours)
$168,000
Production scheduling (400 batches)
50,000
Production engineering (60 change orders)
150,000
Supervision (2,000 direct labor hours)
64,000
Machine maintenance (12,000 machine hours)
108,000
Total activity costs
$540,000
The following additional data were provided for Job 845:
Direct materials costs
$7,000
Direct labor cost (5 Milling direct labor hours;35 Finishing
direct labor hours)
$1,000
Setup hours
5 hours
Production scheduling
1 batch...
Calculating Activity-Based Costing Overhead Rates 1. Calculate the cost per unit of activity driver for each...
Calculating Activity-Based Costing Overhead
Rates
1. Calculate the cost per unit of activity driver for
each activity cost category.
Setup $_____
Production scheduling $______
Production engineering $______
Supervision $_______
Machine maintenance $______
2. Calculate the cost of Job 845 using ABC to assign the
overhead costs.
$______
3. Calculate the cost of Job 845 using the plantwide
overhead rate based on machine hours. (Round your answer to the
nearest dollar.)
$_____
A food company had the following activities and costs:...
Calculating Manufacturing Overhead Rates Windsor Company, accumulated the following data for 2017: Milling Department manufacturing overhead...
Calculating Manufacturing Overhead Rates
Windsor Company, accumulated the following data for 2017:
Milling Department manufacturing overhead
$187,200
Finishing Department manufacturing overhead
$76,800
Machine hours used
Milling Department
9,000 hours
Finishing Department
2,000 hours
Labor hours used
Milling Department
1,000 hours
Finishing Department
1,000 hours
Required
a. Calculate the plantwide manufacturing overhead rate using
machine hours as the allocation base.
$Answer
per machine hour
b. Calculate the plantwide manufacturing overhead rate using direct
labor hours as the allocation base.
$Answer per...
Assume that manufacturing overhead for Windsor Company consisted of the following activities and costs: Setup (1,000...
Assume that manufacturing overhead for Windsor Company consisted
of the following activities and costs:
Setup (1,000 setup hours)
$ 92,000
Production scheduling (300 batches)
24,000
Production engineering (70 change orders)
70,000
Supervision (2,200 direct labor hours)
66,000
Machine maintenance (13,000 machine hours)
78,000
Total activity costs
$ 330,000
The following additional data were provided for Job 845:
Direct material costs
$ 6,000
Direct labor cost (5 Milling direct labor hours; 25 Finishing
direct labor hours)
$ 1,000
Setup hours
5...
Assume that manufacturing overhead for Glassman Company consisted of the following activities and costs: Setup (1,000...
Assume that manufacturing overhead for Glassman Company
consisted of the following activities and costs:
Setup (1,000 setup hours)
$ 146,000
Production scheduling (400 batches)
60,000
Production engineering (60 change orders)
90,000
Supervision (2,000 direct labor hours)
56,000
Machine maintenance (12,000 machine hours)
96,000
Total activity costs
$ 448,000
The following additional data were provided for Job 845:
Direct material costs
$ 8,000
Direct labor cost (5 Milling direct labor hours; 35 Finishing
direct labor hours)
$ 1,000
Setup hours
5...
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:Information is given as Activity Cost Pool; Amount; Activity RateSetting up batches; $59.06; per batchProcessing customer orders; $72.66; per customer orderAssembling products; $3.75; per assembly hourData concerning the two products is below:Product K91B:Number of batches = 84; number of customer orders = 32; number of assembly hours = 483Product F650:Number of batches = 50; number of customer orders = 43; number of assembly hours...
Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:
Activity Cost Pools Activity Rate Assembling products $8.90 per assembly hour
Processing customer orders $31.23 per customer order
Setting up batches $43.72 per batch
Data for one of the company's products follow:
Product U94W
Number of assembly hours 389
Number of customer orders 53
Number of batches 61
How much overhead cost would be assigned to Product U94W using the activity-based costing system?
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to...
Gould Corporation uses the following activity rates from its
activity-based costing to assign overhead costs to products:
Activity Cost Pool
Activity Rate
Setting up batches
$
59.31
per batch
Processing customer orders
$
72.81
per customer order
Assembling products
$
4.00
per assembly hour
Data concerning two products appear below:
Product K91B
Product F65O
Number of batches
84
55
Number of customer orders
34
48
Number of assembly hours
488
895
How much overhead cost would be assigned to Product...
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