Question
In: Accounting
X Company uses a plantwide overhead allocation system, with direct labor cost as the cost driver....
X Company uses a plantwide overhead allocation system, with direct labor cost as the cost driver. Budgeted overhead for the year is $867,000. The following annual budgeted and actual information is available for the only three products that it produces - X, Y, Z:
| X | Y | Z | |
| Units of production | 1,000 | 33,000 | 3,100 |
| Direct labor hours per unit | 8 | 4 | 3 |
| Direct labor wage rate | $17.00 | $24.00 | $26.00 |
How much overhead was allocated to Product Z [round the overhead rate to two decimal places]?
Solutions
Expert Solution
| Answer: | |
|
Budgeted Direct Labor Hours = Total Units x Direct Labor Hours per Unit = (1,000 x 8 ) + ( 33,000 x 4) + ( 3,100 x 3 ) = 8,000 + 132,000 + 9,300 = 149,300 DLHs |
|
|
Plantwide Overhead rate = Budgeted Overhead / Budgeted Direct Labor Hours = $ 867,000 / 149,300 |
$ 5.81 |
|
Overhead allocated to Product Z = Plantwide Overhead rate x DLHs of Product Z = $ 5.81 x ( 3,100 x 3 ) = $ 5.81 x 9,300 |
$ 54,033 |
ekkarill92 answered 1 year agoRelated Solutions
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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
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per labor-hour. Strawberry and vanilla flavors are produced in
Department SV. Chocolate is produced in Department C. Sven manages
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$
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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
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a. If...
Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct...
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per labor-hour. Strawberry and vanilla flavors are produced in
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Strawberry
Vanilla
Chocolate
Direct labor
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$
768
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843
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618
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Direct labor or machine hours may not be the appropriate cost driver for overhead in all...
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driver for overhead in all areas of manufacturing due to the
complexities of many manufacturing processes. Many companies use
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driver that has a direct cause/effect relationship in its applied
overhead costs.
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