**Implementation and Analysis of Departmental Rates (Learning Objective 1)**Hughes Products manufactures its products in two separate departments: Machining and Assembly. Total manufacturing overhead costs for the year are budgeted at $1,056,000. Of this amount, the Machining Department incurs $600,000 (primarily for machine operation and depreciation), while the Assembly Department incurs $456,000. The company estimates it will incur 4,000 machine hours (all in the Machining Department) and 9,600 direct labor hours (1,600 in the Machining Department and 8,000 in the Assembly Department) during the year.Hughes Products currently uses a plantwide overhead rate based on direct labor hours to allocate overhead. However, the company is considering refining its overhead allocation system by using departmental overhead rates. The Machining Department would allocate its overhead using machine hours (MH), but the Assembly Department would allocate its overhead using direct labor (DL) hours. **Chapter 4**The following chart shows the machine hours (MH) and direct labor (DL) hours incurred by Jobs 500 and 501 in each production department:| | Machining Department | Assembly Department ||---------------------------|----------------------|---------------------|| **Job 500** | 10 MH | 15 DL hours || | 2 DL hours | || **Job 501** | 20 MH | 15 DL hours || | 2 DL hours | |Both Jobs 500 and 501 used $1,000 of direct materials. Wages and benefits total $30 per direct labor hour. Hughes Products prices its products at 120% of total manufacturing costs.**Requirements**1. Compute the company’s current plantwide overhead rate.2. Compute refined departmental overhead rates.3. Which job (Job 500 or Job 501) uses more of the company’s resources? Explain.4. Compute the total amount of overhead allocated to each job if the company uses its current plantwide overhead rate.5. Compute the total amount of overhead allocated to each job if the company uses departmental overhead rates.6. Do both allocation systems accurately reflect the resources that each job used?7. Compute the total manufacturing cost and sales price of each job using the company’s current plantwide overhead rate.8. Based on the current (plantwide) allocation system, how much profit did the company think it earned on each job? Based on the refined departmental overhead rates and the sales price determined in Requirement 7, how much profit did it really earn on each job?9. Compare and comment on the results you obtained in Requirements 7 and 8.

"Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Answered: 41A Implementation and analysis of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

XX is aware that there is a learning effect for the production of one of its new products, but is unsure about the degree of learning. The following data relate to this product. Time taken to produce the first unit 28 direct labour hours Production to date 15 units Cumulative time taken to date 104 direct labour hours What is the percentage learning effect?
Activity-Based Costing Steampunk Corporation has the following predicted indirect costs and cost drivers for 2019 for the given activity cost pools: FabricationDepartment FinishingDepartment Cost Driver Maintenance $ 36,000 18,000 Machine hours Materials handling 54,000 27,000 Material moves Machine 126,000 9,000 Machine setups Inspections - 45,000 Inspection hours Total $ 216,000 $ 99,000 The following activity predictions were also made for the year: FabricationDepartment FinishingDepartment Machine hours 5,000 2,500 Material moves 1,500 750 Machine setups 350 25 Inspection hours - 500 It is assumed that the cost per unit of activity for a given activity does not vary between departments. Steampunk's president, Abner Punk, is trying to evaluate the company's product mix strategy regarding two of its product models, SW100 and SG150. The company has been using a company wide overhead rate based on machine hours but is considering…
Please do not give solution in image format thanku
Requirement 1. Calculate the total variable costs of producing 2, 3, and 4 units assuming that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting manufacturing labor-hours. Begin by calculating the cumulative total time in labor-hours using the incremental unit-time learning model. (Round the individual unit time for Xth unit to the nearest whole number) Individual unit time for Cumulative total time: Cumulative number of units 1 2 Xth unit: Labor-hours Labor-hours 3 Data table Direct materials cost Direct manufacturing labor time for first unit Learning curve for manufacturing labor time per radar system Variable manufacturing overhead costs $ 83,000 per unit of RS-32 Direct manufacturing labor costs "Using the formula for an 85% learning curve, b= In 0.85 In 2 -0.162519 0.693147 3,900 direct manufacturing labor-hours 85% incremental unit-time" 20 per direct manufacturing labor-hour 12 per direct manufacturing labor-hour =-0.234465
Question 4: Dhofar Company manufactures two products M1 and Z1. Its sales department has three divisions: Salalah, Raysut and Mirbat. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product M1 : Salalah 45,000 units: Raysut 110,000 units and Mirbat: 25,000 units Product Z1: Salalah 70,000 units: Raysut 82,000 units and Mirbat:0 Sales Prices: M1: 3 OMR and Z1= 4 OMR in all areas. Arrangements are made for the extensive advertising of product M1 and Z1 and it is estimated that Salalah division sales will increase by 30,000 units. Arrangements are also made to advertise and distribute product z1 in the Mirbat area in the second half of 2021 when sales are expected to be 100,000 units. Since the estimated sales of the Raysut division represented an unsatisfactory target, it is agreed to increase both the estimates by 15 %. Prepare a sales budget for the year to 31…
4- B.4.B. Salsa has two service departments, the IT Department and HR Department. Salsa has also two production departments, the Cutting department and the Mixing Department. The usage of the two service departments' output for the year is as follows: Provider of Service User of Service IT HR HR 15 % IT 5 % Cutting 45 % 65 % Mixing 40 % 30 % The budgeted costs in the two service departments for the year as follows: IT: $ 120,000 HR: $ 280,000 Use reciprocal services method to allocate the budgeted costs of the two service departments on production departments.
Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow: (Click icon to view data) Requirement Calculate the total variable costs of producing 2, 4, and 8 units. Begin by calculating the cumulative total time in labor-hours using the cumulative average-time learning model. (Round the cumulative average time per unit to the nearest whole number.) Cumulative number of Cumulative average time units 2 per unit: Labor-hours Cumulative total time: Labor-hours 4 8 Data table Direct material cost $ 84,000 per unit of RS-32 Direct manufacturing labor time for first unit Learning curve for manufacturing labor time per radar system 3,800 direct manufacturing labor-hours 85% cumulative average time² Direct manufacturing labor cost $ 23 per direct manufacturing labor-hour Variable manufacturing overhead cost $ 17 per direct manufacturing labor-hour Using the formula for an 85% learning…
profile-image Student question Time to preview question: 00 : 08 : 51 The Epsilon Co. have a building, which houses three production department, Alpha, Beta and Gamma, and one service department Delta. The service department, Delta is wholly involved in working for the three production departments and it is estimated that department Alpa uses 50%, department Beta uses 30% and department Gamma uses 20% of the services of department Delta. The budgeted overhead for the four departments for a period were: REQUIRED: a. Apportion the costs to the departments on the most equitable bases and calculate the overhead absorption rate, based on labour hours, for all the production department.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS