Question

In: Accounting

Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using...

Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: Activity Cost Driver Amount M XY Production setups Number of setups $ 77,000 8 12 Material handling Number of parts 56,000 56 14 Packaging costs Number of units 203,000 84,000 56,000 $ 336,000 What is the total overhead allocated to Product XY using the current system?

Multiple Choice

$138,600.

$201,600.

$134,400.

$197,400.

Expert Solution

Sol. Calculation of the total Overhead Cost allocated to Product XY using the Current System-

Total Overhead Cost/Total Number of Produced*Number of unit of product XY

$336,000 /140,000 Unit's * 56,000 unit's

$2.4 per unit X 56,000 unit's

$134,400

Total Overhead Allocated to product XY =$134,400

Option (C.) $ 134,400

Working Note :

Total Number of units produced

Number of unit's of Product M+Number of units of product XY

84,000 Unit's+ 56,000 units=140,000 unit's

Total Overhead Cost =>

Production Setup Cost +Material Handling cost + Packaging cost

$77,000 + $ 56,000+ $ 203,000 =$ 336,000

ekkarill92 answered 1 year ago

JUNO company allocated overhead costs to its two products (Basic and Deluxe) using ABC. Juno prepared...

JUNO company allocated overhead costs to its two products (Basic and Deluxe) using ABC. Juno prepared the following annual estimates of each activity and cost driver. Overhead Cost Pool Cost Driver Budgeted Overhead Budgeted Activity (Cost Driver) Machine setups # setups $300,000 100 setups Machining # machine hours $700,000 35,000 machine hours Finishing # direct labor hours $1,000,000 10,000 direct labor hours Calculate the activity pool rate for each activity a) Machine setups b) Machining c) Finishing Calculate the total...

Magnum Company manufactures two different products, A and B. In the past, the company has allocated...

Magnum Company manufactures two different products, A and B. In the past, the company has allocated its plant wide manufacturing overhead costs based on direct labour hours. The new controller suggests that the company consider assigning overhead costs to the products using either traditional activity-based costing or time-determined activity-based costing. After studying the manufacturing activities and costs, the controller collected the following data for last year: Item Product A Product B Units produced and sold 3,000 5,000 Direct labour hours...

(1) Calculate the amount of overhead allocated to the products of a company that has a...

(1) Calculate the amount of overhead allocated to the products of a company that has a predetermined overhead rate of $10 per machine hour if machines were used for 10,000 hours. (2) What if the company actually spent $95,000 on overhead costs? What causes a company to have overapplied or underapplied overhead? Is this a situation that would eventually need to be resolved? If so, how?

Addison Company manufactures two products, Regular and Supreme. Addison's overhead costs consist of machining, $2,500,000; and...

Addison Company manufactures two products, Regular and Supreme. Addison's overhead costs consist of machining, $2,500,000; and assembling, $1,250,000. Information on the two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Regular using traditional costing using activity-based costing is Answers: A. $1,075,000. B. $1,500,000. C. $2,250,000. D. $2,675,000.

What are the manufacturing overhead costs? Assigned costs to products using a predetermined overhead rate using...

What are the manufacturing overhead costs? Assigned costs to products using a predetermined overhead rate using a standard costing system, as discussed, job costing, and manufacturing activity-based costing. Assume manufacturing overhead costs are often called overhead costs applied to products going through the Assembly department. The journal entry reflect manufacturing overhead costs applied to products going through the Finishing department is as follows: Transferred-In Costs The costs associated with manufacturing should transfer from the work-in-process inventory account for the production...

Addison Company manufactures two products, Regular and Supreme. Addison’s total overhead costs consist of machining $2,500,000,...

Addison Company manufactures two products, Regular and Supreme. Addison’s total overhead costs consist of machining $2,500,000, and assembling $1,250,000. Information on the two products is: Regular Supreme Total Direct labor hours 10,000 15,000 25,000 Machine hours (machining) 10,000 30,000 40,000 Number of parts (assembly) 90,000 160,000 250,000 Direct Material Costs $50,000 $75,000 Direct Labor Costs $120,000 $180,000 Units Produced 100,000 20,000 1. Overhead applied to REGULAR using traditional costing based on DIRECT LABOR HOURS is: 2....

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman’s overhead costs consist of setting...

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman’s overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: Board 12 Case 165 Direct labor hours 15,000 25,000 Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Case 165 using activity-based costing is? $3,840,000 $4,608,000 $4,992,000 $6,000,000

Billy Corp allocated the following amounts of manufacturing overhead to Products A & B using only...

Billy Corp allocated the following amounts of manufacturing overhead to Products A & B using only direct labor hours as a driver: Product A 168,000 Product B 112,000 Billy has decided to switch to ABC for the allocation of manufacturing overhead. Billy will still use direct labor hours as a driver for $120,000 of overhead. The remaining overhead will be allocated using machine hours. Product A uses 2,000 machine hours and Product B uses 6,000 machine hours. a) How much...

Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the...

Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 3 activities. The estimated amount of overhead traceable to the 3 activities for the coming year are given below: Activity Cost driver Cost Product 1 Product 2 Purchase orders # of orders $840347 312 579 Maintenance Machine hours $456759 18555 19721 Inspection # of inspections $718649...

ENRIC Company produces multiple products. The company is currently using a traditional system. Total overhead is...

ENRIC Company produces multiple products. The company is currently using a traditional system. Total overhead is projected to amount to $2,300,000. The company uses machine hours as its allocation base. ENRIC expects 200,000 machine hours to be worked plant wide. However, the firm is considering changing to an ABC System. Here, overhead will be separated into four cost pools: Machining, Processing, Setup, and Assembling. Machining, Processing, Setup, and Assembling costs are projected to amount to $800,000, $485,000, $500,000, and $515,000...