Question

In: Accounting

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an...

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 36,000 Setup labor 18,000 Material handling 14,400 Total $ 68,400 Required: a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.) b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.

Show work please

Solutions

Expert Solution

Part A: Calculation of predetermined overhead rate on the basis of machine hours:

Formula:

Predetermined rate = Manufacturing overheads / Machine hours

Manufacturing overhead = $68400

Machine hours = 10000 units * 1 machine hour + 1000 * 2 machine hour = 12000 machine hours

Predetermined rate = $68400 / 12000 machine hours = $5.70 per machine hour

Part B: Calculation of cost driver rates:

Machine hours = 10000 units * 1 machine hour + 1000 * 2 machine hour = 12000 machine hours

Production runs = 80 + 40 = 120 runs

Direct material used in V-1 & V-2 = 10000 units * 2 + 1000 * 4 = $24000

All the best....

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an...
Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 51,000 Setup labor 24,000 Material...
Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an...
Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 39,000 Setup labor 19,200 Material...
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed...
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $450,000 and results in 75,000 units of MSB and 105,000 units of CBL. Each MSB sells for $9, and each unit of CBL sells for $17. Calculate the amount of joint cost allocated to commercial building lumber (CBL) on a physical-units basis. (Round the calculation...
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed...
Snake River Sawmill manufactures two lumber products from a joint milling process. The two products developed are mine support braces (MSB) and unseasoned commercial building lumber (CBL). A standard production run incurs joint costs of $470,000 and results in 77,000 units of MSB and 107,000 units of CBL. Each MSB sells for $3, and each unit of CBL sells for $11. Assume the commercial building lumber is not marketable at split-off but must be further planed and sized at a...
Logan Company manufactures several toy products. Logan presently manufactures and assembles all the parts for its...
Logan Company manufactures several toy products. Logan presently manufactures and assembles all the parts for its toy truck product. Another toy company has offered to sell the parts to Logan for $2.00 per truck. Logan is considering this offer. If Logan buys the truck parts instead of making them, the space used in producing the parts could be used for a new toy monster, which is scheduled to begin production next year. If Logan continues to produce the parts for...
The green and red Company manufactures two products, Product 1 and Product 2. Product 2 was...
The green and red Company manufactures two products, Product 1 and Product 2. Product 2 was developed as an attempt to enter a market closely related to that of Product 1. Product 2 is the more complex of the two products, requiring three hours of direct labour time per unit to manufacture compared to one and one-half hours of direct labour time for Product 1. Product 2 is produced on an automated production line. Overhead is currently assigned to the...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2009 are as follows: Variable Costs Fixed Costs Materials $100,000 $600,000 Other 250,000 600,000 Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2009 are as follows: Variable Costs Fixed Costs Materials $200,000 $600,000 Other 350,000 600,000 Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same...
Product Pricing: Two Products Quality Data manufactures two products, CDs and DVDs, both on the same assembly lines and packaged 10 disks per pack. The predicted sales are 400,000 packs of CDs and 500,000 packs of DVDs. The predicted costs for the year 2009 are as follows: Variable Costs Fixed Costs Materials $200,000 $500,000 Other 150,000 600,000 Each product uses 50 percent of the materials costs. Based on manufacturing time, 40 percent of the other costs are assigned to the...
The following analysis of selected data is for each of the two products Hillman Corporation provides....
The following analysis of selected data is for each of the two products Hillman Corporation provides. Product X Product Y Per-unit data @ 10,000 units Sales price…………………………………..... $51 $30 Product costs: Variable……………………………………… 14 10 Fixed………………………………………….. 9 6 Selling & administrative expenses: Variable …………………………………….. 7 4 Fixed ………………………………………….. 5 2 In Hillman’s operation, machine hour capacity is the company’s constraining resource. Each unit of X requires 4 machine hours, and each unit of Y requires 2 machine hours. Required: Indicate which...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT