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Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: Indirect labor Subassembly Department Final Assembly Department Total The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Setup Quality control Total Budgeted Activity Cost $400,400 198,800 114,800 $714,000 Receivers 80 Loudspeakers 320 Total 400 Activity Base $138,600 Number of setups 261,800 Number of inspections $400,400 The activity-base usage quantities and units produced for the two products follow: Number Number of of Setups Inspections 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 525 875 1,400 Required: 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour 7,000 7,000 14,000

Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: Indirect labor Subassembly Department Final Assembly Department Total The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Setup Quality control Total Budgeted Activity Cost $400,400 198,800 114,800 $714,000 Receivers 80 Loudspeakers 320 Total 400 Activity Base $138,600 Number of setups 261,800 Number of inspections $400,400 The activity-base usage quantities and units produced for the two products follow: Number Number of of Setups Inspections 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 525 875 1,400 Required: 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour 7,000 7,000 14,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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i just need to know question 1, 2 and is possible number 7

2. Determine the total and per-unit factory overhead costs allocated to each product, using the plantwide overhead rate in (1). Round per unit amounts to the nearest whole cent. Total Factory Overhead Factory Overhead Per Unit $ 357,000 X $ 35.75 X $150,150 X 21.45 X Product Receivers Loudspeakers 3. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $420,000 and $294,000 for the Subassembly and Final Assembly departments, respectively. Production Department Rate Department Subassembly Department 300✔ per direct labor hour Final Assembly Department 210 ✔ per direct labor hour 4. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (3). Round per unit amounts to the nearest whole cent. Product Total Factory Overhead Factory Overhead Per Unit Receivers $372,750 ✓ 53.25 ✔ Loudspeakers $ 341,250 ✔ 48.75 ✓ 5. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Round per unit amounts to the nearest whole cent. Activity Activity Rate Setup Quality Control $ $ $ $ 346.5 ✓per setup 119✔ per inspection 142 ✔ per direct labor hour 82 ✔ per direct labor hour Subassembly Department Final Assembly Department 6. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. Total Activity Cost $248,570 ✔ $465,430 ✓ Product Receivers Loudspeakers 7. Comment on the differences in the per-unit overhead allocated to each product using the single plantwide factory overhead rate method, the multiple production department factory overhead rate method, and activity-based costing. The plantwide overhead method allocates $ of overhead to each product, while the multiple production department method allocates $ and multiple production department overhead methods do ✓ distort the allocation of overhead because they do not adequately 35.51✔ of factory overhead to receivers and $ 66.49✔ to loudspeakers. Activity-based costing more overhead. Loudspeakers have more ✔setups than do receivers. In addition, loudspeakers require more 53.25 ✔ overhead to receivers and $ 48.75 ✔ to loudspeakers. Both the plantwide ✔account for how each product consumes overhead. In contrast, activity based costing allocates ✔accurately allocates factory overhead because it better accounts ✔for how each product consumes ✔ quality control inspections than do receivers. As a result. loudspeakers have higher ✔activity costs than Activity Cost Per Unit 35.51 ✔ 66.49 ✔
Transcribed Image Text:2. Determine the total and per-unit factory overhead costs allocated to each product, using the plantwide overhead rate in (1). Round per unit amounts to the nearest whole cent. Total Factory Overhead Factory Overhead Per Unit $ 357,000 X $ 35.75 X $150,150 X 21.45 X Product Receivers Loudspeakers 3. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $420,000 and $294,000 for the Subassembly and Final Assembly departments, respectively. Production Department Rate Department Subassembly Department 300✔ per direct labor hour Final Assembly Department 210 ✔ per direct labor hour 4. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (3). Round per unit amounts to the nearest whole cent. Product Total Factory Overhead Factory Overhead Per Unit Receivers $372,750 ✓ 53.25 ✔ Loudspeakers $ 341,250 ✔ 48.75 ✓ 5. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Round per unit amounts to the nearest whole cent. Activity Activity Rate Setup Quality Control $ $ $ $ 346.5 ✓per setup 119✔ per inspection 142 ✔ per direct labor hour 82 ✔ per direct labor hour Subassembly Department Final Assembly Department 6. Determine the total and per-unit cost assigned to each product under activity-based costing. Round the per unit amounts to the nearest whole cent. Total Activity Cost $248,570 ✔ $465,430 ✓ Product Receivers Loudspeakers 7. Comment on the differences in the per-unit overhead allocated to each product using the single plantwide factory overhead rate method, the multiple production department factory overhead rate method, and activity-based costing. The plantwide overhead method allocates $ of overhead to each product, while the multiple production department method allocates $ and multiple production department overhead methods do ✓ distort the allocation of overhead because they do not adequately 35.51✔ of factory overhead to receivers and $ 66.49✔ to loudspeakers. Activity-based costing more overhead. Loudspeakers have more ✔setups than do receivers. In addition, loudspeakers require more 53.25 ✔ overhead to receivers and $ 48.75 ✔ to loudspeakers. Both the plantwide ✔account for how each product consumes overhead. In contrast, activity based costing allocates ✔accurately allocates factory overhead because it better accounts ✔for how each product consumes ✔ quality control inspections than do receivers. As a result. loudspeakers have higher ✔activity costs than Activity Cost Per Unit 35.51 ✔ 66.49 ✔
Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: Indirect labor Subassembly Department Final Assembly Department Total The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Setup Quality control Total Receivers Loudspeakers Total Budgeted Activity Cost Required: $400,400 198,800 114,800 $714,000 The activity-base usage quantities and units produced for the two products follow: 400 Activity Base $138,600 Number of setups 261,800 Number of inspections $400,400 Number of Number of Setups Inspections 80 320 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 7,000 7,000 525 875 1,400 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour 14,000
Transcribed Image Text:Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costing Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: Indirect labor Subassembly Department Final Assembly Department Total The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: Activity Setup Quality control Total Receivers Loudspeakers Total Budgeted Activity Cost Required: $400,400 198,800 114,800 $714,000 The activity-base usage quantities and units produced for the two products follow: 400 Activity Base $138,600 Number of setups 261,800 Number of inspections $400,400 Number of Number of Setups Inspections 80 320 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 7,000 7,000 525 875 1,400 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour 14,000
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