In: Accounting
Requirement 1: Compute cost allocation rate for each activity
Formula: \( \frac{\texttt{Manufacturing overheads}}{\texttt{Allocation base}} \)
Manufacturing Overheads | Allocation Base | Activity Cost Allocation Rate | |||
Material handling | $12,000 | 3000 | parts | $4 | per part |
Machine Setups | $3,400 | 10 | setups | $340 | per setup |
Insertion of Parts | $48,000 | 3000 | parts | $16 | per part |
Finishing | $80,000 | 2000 | direct labor hours | $40 | per hour |
Total | $143,400.00 |
Requirement 2:
Formula:\( {\texttt{Activity cost allocation rate}}\times {\texttt{Allocation base}} \)
Requirement 2: Compute manufacturing overhead cost for the JOB 420 | |||||
Activity | Activity Cost Allocation Rate | Allocation base | MOH Assigned | ||
Material handling | $4 | per part | 200 | Parts | $800 |
Machine Setups | $340 | per setup | 2 | Setups | $680 |
Insertion of Parts | $16 | per part | 200 | Parts | $3,200 |
Finishing | $40 | per hour | 130 | direct labor hours | $5,200 |
Total |
$9,880 |
Requirement 3: Formula:\( {\texttt{Activity cost allocation rate}}\times {\texttt{Allocation base}} \)
Compute manufacturing overhead cost for the JOB 510 |
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Activity Cost Allocation Rate | Allocation base | MOH Assigned | |||
Material handling | $4 | per part | 425 | Parts | $1,700 |
Machine Setups | $340 | per setup | 4 | Setups | $1,360 |
Insertion of Parts | $16 | per part | 425 | Parts | $6,800 |
Finishing | $40 | per hour | 350 | direct labor hours | $14,000 |
Total | $23,860 |
1. Cost allocation rate for each activity is calculated.
2. Manufacturing overhead cost assigned to the JOB 420 is $9880
3. Manufacturing overhead cost assigned to the JOB 420 is $23860