Question
In: Accounting
The total overhead cost incurred by a factory producing screw-machine products last year was $5,800,000 of...
The total overhead cost incurred by a factory producing
screw-machine products last year was $5,800,000 of which $800,000
was assigned to five automated screw-machine centres. These
expensive advanced machining centres ran for a total of 20,000
machine-hours. Direct material consumption during that period cost
$9,062,500. Direct labour was composed of general hands and
tradespeople. The general hands worked a total of 100,000 hours,
and the tradespeople worked 50,000 hours. The general hands were
paid a total of $2,700,000, and the tradespeople were paid
$1,800,000.
A new product is estimated to require $3.12 worth of direct
material and components, 6 minutes of direct labour by a general
hand, and 10 minutes of screw-machine time per unit. The same
product can be produced manually, requiring a total of one hour of
direct labour. A tradesperson would be required for 40 minutes and
a general hand would be needed for 20 minutes.
a) Estimate the factory cost per unit of this new product if (i)
machine made, and (ii) handmade.
For each case, allocate the unassigned overhead by each of the
following methods: (1) direct labour cost; (2) direct labour hours;
(3) direct material cost; (4) prime cost; and (5) machine hours.
(It is suggested you initially calculate the overhead factors for
each method; and use a table to show your cost estimates for each
method).
b) Which estimates do you think are realistic? Give reasons for your opinion. What additional information would be useful to perform more reliable cost estimation?
c) Discuss how the cost of the initial set-up of the screw-machine (estimated to take 8 hours of a tradesperson’s time) could be incorporated into your estimates of the proposed product in a). Discuss whether allowing for the cost of the initial set-up could impact the decision to produce the product by machine or by hand.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
The total overhead cost incurred by a factory producing screw-machine products last year was $5,800,000 of...
The total overhead cost incurred by a factory producing
screw-machine products last year was
$5,800,000 of which $800,000 was assigned to five automated
screw-machine centres. These
expensive advanced machining centres ran for a total of 20,000
machine-hours. Direct material
consumption during that period cost $9,062,500. Direct labour
was composed of general hands and
tradespeople. The general hands worked a total of 100,000
hours, and the tradespeople worked
50,000 hours. The general hands were paid a total of
$2,700,000, and the...
The following information is available from the Terry Company: Actual total factory overhead cost incurred $...
The following information is available from the Terry
Company:
Actual total factory overhead
cost incurred
$
25,000
Actual fixed overhead cost
incurred
$
10,400
Budgeted fixed overhead
expenses
$
11,000
Actual direct labor hours (DLH)
worked
4,400
Standard DLHs for this period’s
production (output)
4,000
Standard variable overhead rate
per DLH
$
3.00
Standard fixed overhead rate per
DLH
$
2.50
What is the fixed overhead production volume variance
for Terry Company for the period, to the nearest whole dollar?...
Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for...
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 10,000 hours for production:
Variable overhead costs:
Indirect factory labor
$24,000
Power and light
7,500
Indirect materials
17,000
Total variable overhead cost
$ 48,500
Fixed overhead costs:
Supervisory salaries
$43,890
Depreciation of plant and equipment
11,550
Insurance and property taxes
21,560
Total fixed overhead cost
77,000
Total factory overhead...
Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for...
Factory Overhead Cost Variance Report Tannin Products Inc.
prepared the following factory overhead cost budget for the Trim
Department for July of the current year, during which it expected
to use 18,000 hours for production: Variable overhead cost:
Indirect factory labor $43,200 Power and light 13,500 Indirect
materials 21,600 Total variable overhead cost $ 78,300 Fixed
overhead cost: Supervisory salaries $76,490 Depreciation of plant
and equipment 20,130 Insurance and property taxes 37,580 Total
fixed overhead cost 134,200 Total factory overhead...
Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for...
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 8,000 hours for production:
Variable overhead costs:
Indirect factory labor
$23,200
Power and light
6,000
Indirect materials
12,800
Total variable overhead cost
$42,000
Fixed overhead costs:
Supervisory salaries
$38,990
Depreciation of plant and equipment
10,260
Insurance and property taxes
19,150
Total fixed overhead cost
68,400
Total factory overhead cost...
Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for...
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 8,000 hours for production:
Variable overhead costs:
Indirect factory labor
$24,800
Power and light
6,000
Indirect materials
10,400
Total variable overhead cost
$ 41,200
Fixed overhead costs:
Supervisory salaries
$33,520
Depreciation of plant and equipment
8,820
Insurance and property taxes
16,460
Total fixed overhead cost
58,800
Total factory overhead...
Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget for...
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 12,000 hours for production:
Variable overhead costs:
Indirect factory labor
$39,600
Power and light
9,120
Indirect materials
16,800
Total variable overhead cost
$ 65,520
Fixed overhead costs:
Supervisory salaries
$45,600
Depreciation of plant and equipment
12,000
Insurance and property taxes
22,400
Total fixed overhead cost
80,000
Total factory overhead...
#7 Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget...
#7
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 16,000 hours for production:
Variable overhead costs:
Indirect factory
labor
$48,000
Power and light
11,520
Indirect materials
24,000
Total
variable overhead cost
$ 83,520
Fixed overhead costs:
Supervisory
salaries
$59,280
Depreciation of plant
and equipment
15,600
Insurance and property
taxes
29,120
Total
fixed overhead cost
104,000
Total factory...
#7 Factory Overhead Cost Variance Report Tannin Products Inc. prepared the following factory overhead cost budget...
#7
Factory Overhead Cost Variance Report
Tannin Products Inc. prepared the following factory overhead
cost budget for the Trim Department for July of the current year,
during which it expected to use 16,000 hours for production:
Variable overhead costs:
Indirect factory
labor
$48,000
Power and light
11,520
Indirect materials
24,000
Total
variable overhead cost
$ 83,520
Fixed overhead costs:
Supervisory
salaries
$59,280
Depreciation of plant
and equipment
15,600
Insurance and property
taxes
29,120
Total
fixed overhead cost
104,000
Total factory...
A Manufacturing Company Whose Total Factory Overhead Cost Fluctuate Considerably From Year ... Question: A manufacturing...
A Manufacturing Company Whose Total Factory Overhead Cost
Fluctuate Considerably From Year ... Question: A manufacturing
company whose total factory overhead cost fluctuate considerably
from year to yea... A manufacturing company whose total factory
overhead cost fluctuate considerably from year to year according to
increases and decreases in the number of direct labor-hours worked
in the factory. Total factory overhead costs at high and low levels
of activity for recent years are Low: 52800, High: 70,400, Total
factory overhead cost...
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