Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Car Truck Estimated wheels produced 36,000 15,000 Direct labor hours per wheel 1 3 Total estimated overhead costs for the two product lines are $858,600. Your answer is incorrect. Try again. Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Overhead rate $enter a dollar amount per direct labor hour rounded to 2 decimal places per direct labor hour LINK TO TEXT LINK TO VIDEO Your answer is incorrect. Try again. Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Car wheels $enter a dollar amount Truck wheels $enter a dollar amount LINK TO TEXT LINK TO VIDEO Your answer is correct. Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Estimated Use of Cost Drivers Estimated Overhead Costs Setting up machines 1,000 setups $243,000 Assembling 81,000 labor hours 324,000 Inspection 1,200 inspections 291,600 Compute the activity-based overhead rates for these three cost pools. Overhead Rates Setting up machines $enter a dollar amount Assembling $enter a dollar amount Inspection $enter a dollar amount
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
|
|
|
|
|
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)