Clemson Co. incurs $700,000 of overhead costs each year in its three main departments, machining ($400,000), inspections ($200,000) and packing ($100,000). The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year. Information about Clemson%u2019s two products is as follows: Product X 1,000 100 Orders packed 350 Direct labor hours 1,700 If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year? Machining hours Inspections $340,000 $168,334 $242,308 $350,000 Product Y 3,000 500 650 1,800
Clemson Co. incurs $700,000 of overhead costs each year in its three main departments, machining ($400,000), inspections ($200,000) and packing ($100,000). The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year. Information about Clemson%u2019s two products is as follows: Product X 1,000 100 Orders packed 350 Direct labor hours 1,700 If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year? Machining hours Inspections $340,000 $168,334 $242,308 $350,000 Product Y 3,000 500 650 1,800
Chapter1: Financial Statements And Business Decisions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Clemson Co. incurs $700,000 of overhead costs each year in its three main departments, machining ($400,000),
inspections ($200,000) and packing ($100,000). The machining department works 4,000 hours per year, there are 600
inspections per year, and the packing department packs 1,000 orders per year. Information about Clemson%u2019s two
products is as follows:
$340,000
$168,334
Machining hours
Inspections
Orders packed
350
650
Direct labor hours
1,700
1,800
If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year?
$242,308
Product X
1,000
100
$350,000
Product Y
3,000
500
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