DLN is an architectural firm that designs and builds build- ings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN's simple cost- ing system allocates overhead costs to its jobs based on number of jobs. There were three jobs in 2017. One customer, Chandler, has complained that the cost and price of its building in Chicago was not competitive. As a result, the controller has initiated a detailed review of the overhead allocation to determine if overhead costs should be charged to jobs in proportion to consumption of overhead resources by jobs. She gathers the following information: Quantity of Cost Drivers Used by Each Project Overhead Manley 8,000 4,500 26,000 Department Design Engineering Construction Cost Driver Costs in 2017 Chandler Нeпry Design department hours Number of engineering hours $3,000,000 1,000,000 4,100,000 $8,100,000 2,000 4,000 29,000 10,000 4,000 27,000 Labor-hours

DLN is an architectural firm that designs and builds build- ings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN's simple cost- ing system allocates overhead costs to its jobs based on number of jobs. There were three jobs in 2017. One customer, Chandler, has complained that the cost and price of its building in Chicago was not competitive. As a result, the controller has initiated a detailed review of the overhead allocation to determine if overhead costs should be charged to jobs in proportion to consumption of overhead resources by jobs. She gathers the following information: Quantity of Cost Drivers Used by Each Project Overhead Manley 8,000 4,500 26,000 Department Design Engineering Construction Cost Driver Costs in 2017 Chandler Нeпry Design department hours Number of engineering hours $3,000,000 1,000,000 4,100,000 $8,100,000 2,000 4,000 29,000 10,000 4,000 27,000 Labor-hours

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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Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work $ 40 17 $ 66 Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per nonth 32 363 574 620 units 330 units Harbour has monthly overhead of $186,075, which is divided into the following cost pools: $ 91,300 53,975 40,800 Setup costs Quality control Maintenance Total $186,075 The company has also compiled the following information about the chosen cost drivers: Work Total Home 38 Number of setups Number of inspections Number of machine hours 1,600 72 110 330 305 635 1,800 3,400 Required: 1. Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Overhead Assigned Home Model: Work Model: Total Overhead Cost 2. Calculate…
Required:1. Using the traditional approach to assigning overhead costs to academic programs:a. Calculate the predetermined overhead rate.b. Assign the overhead costs to each academic program using the predetermined rate.c. Calculate the total cost per student (direct costs plus overhead) of operating each academic program.2. Using ABC, complete the following requirements:a. Complete the first-stage allocation of overhead costs to academic programs.b. Calculate the activity rates for each of the activity cost pools.c. Using the activity rates calculated in (b), complete the second-stage allocation of overhead to academic programs.3. Based on the results of (2), calculate the total cost per student (direct costs plus overhead) of operating each academic program.4. Draft a memo to Maple explaining the key reasons for differences in the total cost per student of operating each academic program that arise between traditional costing approach and ABC.
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! Required information [The following information applies to the questions displayed below.] For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.60 hours of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The LEC 40 requires only 0.20 hours of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours. Despite the growing popularity of the company's new LEC 90, profits have been declining steadily. Management is beginning to believe that there may be a problem with the company's costing system. Direct material and direct labor costs per unit are as follows: Direct materials Direct labor…
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How to solve the factory overhead rate of 2/3 of the labor cost?
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