Question

In: Accounting

County Cleats Co. manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers:...

County Cleats Co. manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers:

Overhead Cost Pool

Cost Driver

Overhead Cost $

Budgeted Level for Cost Driver

Quality Control

# of inspections

78,000

1,200

Machine Time

Machine hours

188,000

800

Materials Handling

# of Batches

1,200

50

Miscellaneous Overhead Cost

Direct labor hours

59,000

5,000

County Cleats Co. has an order for 30,000 pairs of cleats from Dicks Sporting Goods and it has the following production requirements:

Number of Inspections

375

Number of Machine hours

220

Number of Batches

8

Direct Labor Hours

840

Using activity-based costing and the information above, compute the overall overhead cost of the order for Dicks Sporting Goods and the overhead cost per unit i.e. for a pair of cleats.
if direct materials and direct labor are $15 and $8 per pair, respectively, and the company wants a profit margin of 25%, how much will each pair of cleats cost Dicks Sporting Goods?

Expert Solution

1	Overhead cost
	Quality Control (375 x $65.00)	$24,375
	Machine Time (220 x $235.00)	$51,700
	Material Handling (8 x $24.00)	$192
	Miscellaneous Overhead Cost (840 x $11.80)	$9,912
	Total overhead cost	$86,179
	Pairs of cleats	30,000
	Overhead cost per unit	$2.87

2	Direct materials	$15.00
	Direct labor	$8.00
	Overhead	$2.87
	Total Cost	$25.87
	Add: Profit Margin ($25.87 x 25%)	$6.47
	Each pair of cleats cost Dicks Sporting Goods	$32.34


	Working
		Overhead Cost Budgeted	Buegetd Activity	Activity Rate
	Quality Control	$78,000	1,200	$65.00
	Machine Time	$188,000	800	$235.00
	Material Handling	$1,200	50	$24.00
	Miscellaneous Overhead Cost	$59,000	5,000	$11.80

ekkarill92 answered 2 years ago

Diamond Cleats Co. manufactures cleats and baseball bats. It has outlined below the following over-head costs....

Diamond Cleats Co. manufactures cleats and baseball bats. It has outlined below the following over-head costs. Support Activity Budgeted Overhead Cost Driver Estimated Cost driver Machine Time $100,000 # of Machine Hrs 2,000 Quality Control 78,000 # of inspections 1,200 Materials Handling 1,200 # of batches 50 Other overhead costs 60,000 Direct Labor Hrs 5,000 Diamond Cleats Co. has on order for cleats and baseball bats that has the following production requirements. Cleats ...

Texas Co. established the following overhead cost pools and cost drivers: Budgeted Estimated Overhead Cost Pool...

Texas Co. established the following overhead cost pools and cost drivers: Budgeted Estimated Overhead Cost Pool Overhead Cost Driver Cost Driver Level Quality controls $780,000 # of inspections 26,000 inspections Machine setups $720,000 # of setups 12,000 setups Other overhead costs $900,000 # of machine hrs 50,000 machine hrs Total overhead costs $2,400,000 A recent order for sailboats used: Quality inspections 750 inspections Machine setups 500 setups Machine hours (MHs) 2,400 machine hours Required: a. What is the overhead rate...

Golf Excellence Inc. manufactures golf shoes. The cleats, however are not always properly aligned and often...

Golf Excellence Inc. manufactures golf shoes. The cleats, however are not always properly aligned and often need to be adjusted during the internal inspection process. The inspection costs and repair costs are $8 and $2, respectively. Of the 5,000 shoes inspected last year, 3% were found to have problems with the clears. Another 2% of the 5,000 shoes had problems with the cleats but were not detected during the internal inspection. Defective shoes were sold and shipped back to Golf...

5) A company has identified the following overhead costs and cost drivers for the coming year:...

5) A company has identified the following overhead costs and cost drivers for the coming year: Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level Machine setup Number of setups $ 20,000 200 Inspection Number of inspections 130,000 6,500 Material handling Number of material moves 80,000 8,000 Engineering Engineering hours 50,000 1,000 Total $280,000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials $5,000 $12,000 $8,000 Direct...

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:...

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: Total overhead budgeted = $200,000 Total direct labor hours budgeted = 2,000 hours Actual direct labor hours worked on Job 21 = 100 Actual direct materials = $5,000 total Actual direct labor = $3,000 total Actual units completed = 100 The totoal cost of Job 21 is: a. $ 22,500 b. $ 16,000 c. $ 18,000 d. $ 19,900 The Total Cost of Job...

Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce...

Sheridan Publishing identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of textbooks the company publishes. Type of Textbook Activity (Cost) Cost Driver Deluxe Moderate Economy Machine maintenance ($360,000) Number of machine hours 300 900 1,200 Setups ($640,000) Number of setups 30 15 5 Packing ($168,000) Number of cartons 15 35 55 Photo development ($680,000) Number of pictures 4,500 2,500 1,500 Deluxe textbooks are made with the finest-quality paper, six-color printing, and...

Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce...

Grass Inc. identified the following overhead activities, their respective costs, and their cost drivers to produce the three types of lawn mowerss Type of Mowers Activity (Cost) Cost Driver Deluxe Moderate Economy Machine maintenance ($545,600) Number of machine hours 220 780 1,200 Setups ($416,000) Number of setups 29 13 6 Quality control ($203,322) Number of inspections 15 34 45 Rent ($408,100) Number of square feet 420 180 110 The company produced the following number of lawn mowers during the prior...

Define what a cost driver is and how are cost drivers used to allocate overhead costs...

Define what a cost driver is and how are cost drivers used to allocate overhead costs and give an example.

Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs,...

Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $466,260 Number of setups 570 Ordering costs 369,600 Number of orders 17,600 Machine costs 702,100 Machine hours 41,300 Receiving 414,000 Receiving hours 9,200 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $574,000 $790,000 Direct...

DAB Company has identified the following overhead activities, costs, and activity drivers for the coming year:...

DAB Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Material-handling costs.. £45,000 Number of moves......... 450 Machine costs................ £80,000 Machine hours.............. 20,000 Order costs.................... £15,000 Number of orders......... 750 Receiving costs.............. £30,000 Number of parts........... 50,000 Setup costs.................... £50,000 Number of setups......... 250 Assume that each activity corresponds to a process. DAB’s normal activity is 5,000 direct labor hours. The following two jobs...