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
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(per thousand gallons) follow.
Strawberry
Vanilla
Chocolate
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$
757
$
832
$
1,132
Raw materials (per 1,000 gallons)
807
507
607
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per labor-hour. Strawberry and vanilla flavors are produced in
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Chocolate
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Direct labor or machine hours may not be the appropriate cost driver for overhead in all...
Direct labor or machine hours may not be the appropriate cost
driver for overhead in all areas of manufacturing due to the
complexities of many manufacturing processes. Many companies use
activity-based costing (ABC) which uses multiple drivers (items
that consume resources) rather than just one driver to apply
overhead to their activities. With ABC, a company can use a cost
driver that has a direct cause/effect relationship in its applied
overhead costs.
Waterways looked into ABC as a method of...
Direct labor or machine hours may not be the appropriate cost driver for overhead in all...
Direct labor or machine hours may not be the appropriate cost
driver for overhead
in all areas of manufacturing due to the complexities of many
manufacturing
processes. Many companies use activity-based costing (ABC) which
uses multiple drivers
(items that consume resources) rather than just one driver to
apply overhead to their
activities. With ABC, a company can use a cost driver that has a
direct cause/effect relationship
in its applied overhead costs.
Evian looked into ABC as a method of...
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