Jetsons Jetpacks manufactures jetpacks and uses divisional-based costing to allocate overhead on the basis of direct...

Jetsons Jetpacks manufactures jetpacks and uses divisional-based costing to allocate overhead on the basis of direct labour hours. Direct materials and direct labour costs per sprocket are $197 and $103, respectively.

Producing one jetpack requires 32 labour hours comprised of:

15 hours in machining
10 hours in assembly, and
7 hours in finishing

Information for each department is as follows:

	Cutting	Assembly	Finishing
Overhead costs	$185,000	$102,000	$75,000
Direct labour hours	30,000	8,000	15,000

Calculate the total cost of producing one jetpack.

Solutions

Expert Solution

Cutting Department Overhead allocation rate = Overhead Costs/ Direct labor Hours

Cutting Department Overhead allocation rate = $185,000/ 30,000

Cutting Department Overhead allocation rate = $6.17 Per hour

Assembly Department Overhead allocation rate = Overhead Costs/ Direct labor Hours

Assembly Department Overhead allocation rate = $102,000/ 8,000

Assembly Department Overhead allocation rate = $12.75 Per hour

Finishing Department Overhead allocation rate = Overhead Costs/ Direct labor Hours

Finishing Department Overhead allocation rate = $75,000/ 15,000

Finishing Department Overhead allocation rate = $5.00 Per hour

Calculation of the total cost of producing on Jetpack:

Particulars	Amount ($)
Direct Material	197.00
Direct Labor	103.00
Cutting Department Overhead Cost (15 Hours $6.17)	92.55
Assembly Department Overhead Cost (10 Hours $12.75)	127.50
Finishing Department Overhead Cost (7 Hours $5.00)	35.00
Total Cost of production of one Jetpack	555.05

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Waymire Ltd. currently uses a traditional costing system based on direct labour hours to allocate overhead....

Waymire Ltd. currently uses a traditional costing system based on direct labour hours to allocate overhead. This year, the company has budgeted to produce 1668 units of one of its products. Each unit requires 5 hours of direct labour. For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 3 activities. The following are the activities, budgeted total cost and cost drivers per activity for the upcoming year: Activity Cost...

Company uses standard costing. Overhead is applied to products on the basis of standard direct labor...

Company uses standard costing. Overhead is applied to products on the basis of standard direct labor hours for actual production. Data for company follows: Standard direct labor hours allowed for actual output 110,000 Actual direct labor hours 115,000 Direct labor hours budgeted in the master budget 120,000 Budgeted total variable overhead cost $360,000 Actual variable overhead cost 328,000 1.Calculate the variable overhead spending variance and whether it is favorable or unfavorable. 2.Calculate the variable overhead efficiency variance and whether it...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow. Strawberry Vanilla Chocolate Direct labor (per 1,000 gallons) $758 $833 $1,133 Raw materials (per 1,000 gallons) 808 508 608 Required: a. If the number of...

Beta Fish Corporation uses a predetermined overhead rate based on direct labor hours to allocate manufacturing...

Beta Fish Corporation uses a predetermined overhead rate based on direct labor hours to allocate manufacturing overhead to jobs. The company estimated that it would incur $600,500 of manufacturing overhead during the year and that 150,700 direct labor hours would be worked. During the year, the company actually incurred manufacturing overhead costs of $582,300 and 135,300 direct labor hours were worked. By how much was manufacturing overhead overallocated or underallocated for the year? (Round intermediary calculations to the nearest cent...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $2 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow: Strawberry Vanilla Chocolate Direct labor (per 1,000 gallons) $ 759 $ 834 $ 1,134 Raw materials (per 1,000 gallons) 809 509 609 Required: a. If...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow: Strawberry Vanilla Chocolate Direct labor (per 1,000 gallons) $ 757 $ 832 $ 1,132 Raw materials (per 1,000 gallons) 807 507 607 Required: a. If...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow. Strawberry Vanilla Chocolate Direct labor (per 1,000 gallons) $ 757 $ 832 $ 1,132 Raw materials (per 1,000 gallons) 807 507 607 Required: a. If...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow. Strawberry Vanilla Chocolate Direct labor (per 1,000 gallons) $ 768 $ 843 $ 1,143 Raw materials (per 1,000 gallons) 818 518 618 Required: a. If...

ABC uses job-order costing. It applies overhead cost to jobs on the basis of direct labor-hours....

ABC uses job-order costing. It applies overhead cost to jobs on the basis of direct labor-hours. The following transactions took place during the year: a) $300,000 of raw materials were purchased on account b) Raw materials were issued into production: $90,000 direct materials and $40,000 indirect materials c) Labor costs incurred: $40,000 direct, $130,000 indirect, sales commissions $50,000, administrative salaries $100,000 d) Utility costs for the factory were $60,000 e) Depreciation recorded was $300,000 (70% related to factory; 30% related...

A firm uses backflush costing on a direct costing basis. It incurs the following costs this...

A firm uses backflush costing on a direct costing basis. It incurs the following costs this period (the firm has NO fixed overhead costs). Direct materials costs: $20,000 Direct labor costs: $20,000 Variable overhead costs: $10,000 The firm's total units (completed and in process) is 1,839. The firm has 45 units in process and 96 unsold units in finished goods. The firm has $339 of unused raw materials left over at the end of the period. What is the balance...

Subjects