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.ProductTotal Factory Overhead Factory Overhead Per UnitReceiversLoudspeakers3. 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 theSubassembly and Final Assembly departments, respectively.DepartmentSubassembly DepartmentFinal Assembly Department4. 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.Total Factory Overhead Factory Overhead Per UnitProduction Department Rateper direct labor hourper direct labor hourProductReceiversLoudspeakers5. 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.ActivityActivity RateSetupQuality ControlProductReceiversLoudspeakersper setupper inspectionSubassembly Departmentper direct labor hourFinal Assembly Departmentper direct labor hour6. 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 CostActivity Cost Per Unit7. 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 $multiple production department overhead methodsdistort the allocation of overhead because theyof factory overhead to receivers and $to loudspeakers. Activity-based costingLoudspeakers havesetups than do receivers. In addition, loudspeakers requireoverhead to receivers and $to loudspeakers. Both the plantwide andaccount for how each product consumes overhead. In contrast, activity based costing allocates $accurately allocates factory overhead becausefor how each product consumes overhead.quality control inspections than do receivers. As a result, loudspeakers haveactivity costs than Allocate overhead using a single plantwide rate, multiple department rates, and activity-based costingBig Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows:Indirect laborSubassembly DepartmentFinal Assembly DepartmentTotalThe activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:ActivitySetupQuality controlTotalBudgetedActivity CostRequired:Receivers80Loudspeakers 320Total400$400,400198,800114,800$714,000The activity-base usage quantities and units produced for the two products follow:$138,600 Number of setups261,800 Number of inspections$400,400Numberof Number ofSetups Inspections450Activity Base1,7502,200Direct LaborHours-Subassembly8755251,400Direct LaborHours-Final UnitsAssembly Produced7,0007,00014,0005258751,4001. Determine a plantwide overhead rate based upon direct labor hours.Direct labor overhead rate: $per direct labor hour

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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 80 Receivers 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 of Number of Setups Inspections 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 7,000 7,000 14,000 525 875 1,400 Required: 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour

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 80 Receivers 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 of Number of Setups Inspections 450 1,750 2,200 Direct Labor Hours- Subassembly 875 525 1,400 Direct Labor Hours-Final Units Assembly Produced 7,000 7,000 14,000 525 875 1,400 Required: 1. Determine a plantwide overhead rate based upon direct labor hours. Direct labor overhead rate: $ per direct labor hour

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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