Catalytic Chemical Corporation has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown): Activity Total Cost Cost Driver Maintenance $20,000 Machine hours Materials receiving 80,000 Shipments received Machine setups 50,000 # of setups Inspection 30,000 # of inspections The expected activity for the year for various cost drivers is: Direct Labor Hours 40,000 Machine Hours 20,000 Shipments Received 4,000 Setups 200 Quality Inspections 8,000 The company is considering accepting a significant production contract. Estimates for the contract are as follows: Direct materials $100,000 Direct labor (7,500 hours) $150,000 Number of material shipments received 290 Number of inspections 50 Number of setups 35 Number of machine houre 3,000 NOTE: Round all per-unit costs to nearest cent. What amount of overhead would be allocated to the contract if a company-wide rate based on direct labor hours were used?
Catalytic Chemical Corporation has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown): Activity Total Cost Cost Driver Maintenance $20,000 Machine hours Materials receiving 80,000 Shipments received Machine setups 50,000 # of setups Inspection 30,000 # of inspections The expected activity for the year for various cost drivers is: Direct Labor Hours 40,000 Machine Hours 20,000 Shipments Received 4,000 Setups 200 Quality Inspections 8,000 The company is considering accepting a significant production contract. Estimates for the contract are as follows: Direct materials $100,000 Direct labor (7,500 hours) $150,000 Number of material shipments received 290 Number of inspections 50 Number of setups 35 Number of machine houre 3,000 NOTE: Round all per-unit costs to nearest cent. What amount of overhead would be allocated to the contract if a company-wide rate based on direct labor hours were used?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...
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Question
Catalytic Chemical Corporation has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown):
Activity
|
Total Cost
|
Cost Driver
|
Maintenance
|
$20,000
|
Machine hours
|
Materials receiving
|
80,000
|
Shipments received
|
Machine setups
|
50,000
|
# of setups
|
Inspection
|
30,000
|
# of inspections
|
The expected activity for the year for various cost drivers is:
Direct Labor Hours
|
40,000
|
Machine Hours
|
20,000
|
Shipments Received
|
4,000
|
Setups
|
200
|
Quality Inspections
|
8,000
|
The company is considering accepting a significant production contract. Estimates for the contract are as follows:
Direct materials
|
$100,000
|
Direct labor (7,500 hours)
|
$150,000
|
Number of material shipments received
|
290
|
Number of inspections
|
50
|
Number of setups
|
35
|
Number of machine houre
|
3,000
|
NOTE: Round all per-unit costs to nearest cent.
What amount of overhead would be allocated to the contract if a company-wide rate based on direct labor hours were used?
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