Elkin Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024: Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $2.00 per part Machine setup Number of setups 700.00 per setup Insertion of parts Number of parts 25.00 per part Finishing Number of finishing hours 50.00 per hour Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 are as follows: Standard Deluxe Parts per rim 8.0 9.0 Setups per 500 rims 16.0 16.0 Finishing hours per rim 2.0 3.5 Total direct labor hours per rim 3.0 7.0 The company expects to produce 500 units of each model during the year. Requirement 1. Compute the total estimated indirect manufacturing cost for 2024. Begin by selecting the formula to compute the total estimated overhead (OH) costs. Total estimated × = overhead costs Now compute the total estimated indirect manufacturing cost for 2024. Total Estimated Activity Indirect Manufacturing Cost Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Requirement 2. Prior to 2024, Elkin used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2024. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent. First, select the formula, and then enter the amounts to compute the allocation rate. ÷ = Allocation rate ÷ = Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent. Indirect manufacturing cost per rim: Standard model: Deluxe model: Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2024. Carry each cost per unit to the nearest cent. Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.) Allocated Mfg. Activity OH Cost Per Rim Standard Materials handling Machine setup Insertion of parts Finishing Total indirect cost per rim Allocated Mfg. OH Cost Per Rim Deluxe
Elkin Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024: Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $2.00 per part Machine setup Number of setups 700.00 per setup Insertion of parts Number of parts 25.00 per part Finishing Number of finishing hours 50.00 per hour Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 are as follows: Standard Deluxe Parts per rim 8.0 9.0 Setups per 500 rims 16.0 16.0 Finishing hours per rim 2.0 3.5 Total direct labor hours per rim 3.0 7.0 The company expects to produce 500 units of each model during the year. Requirement 1. Compute the total estimated indirect manufacturing cost for 2024. Begin by selecting the formula to compute the total estimated overhead (OH) costs. Total estimated × = overhead costs Now compute the total estimated indirect manufacturing cost for 2024. Total Estimated Activity Indirect Manufacturing Cost Materials handling Machine setup Insertion of parts Finishing Total estimated indirect manufacturing cost Requirement 2. Prior to 2024, Elkin used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2024. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent. First, select the formula, and then enter the amounts to compute the allocation rate. ÷ = Allocation rate ÷ = Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent. Indirect manufacturing cost per rim: Standard model: Deluxe model: Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2024. Carry each cost per unit to the nearest cent. Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.) Allocated Mfg. Activity OH Cost Per Rim Standard Materials handling Machine setup Insertion of parts Finishing Total indirect cost per rim Allocated Mfg. OH Cost Per Rim Deluxe
Chapter1: Financial Statements And Business Decisions
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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.
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Elkin Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2024:
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Activity
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Allocation Base
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Predetermined
|
|---|---|---|
|
Materials handling
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Number of parts
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$2.00 per part
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Machine setup
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Number of setups
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700.00 per setup
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Insertion of parts
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Number of parts
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25.00 per part
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Finishing
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Number of finishing hours
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50.00 per hour
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Elkin produces two wheel rim models: standard and deluxe. Expected data for 2024 are as follows:
|
|
Standard
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Deluxe
|
|---|---|---|
|
Parts per rim
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8.0
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9.0
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|
Setups per 500 rims
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16.0
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16.0
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Finishing hours per rim
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2.0
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3.5
|
|
Total direct labor hours per rim
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3.0
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7.0
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The company expects to produce 500 units of each model during the year.
Requirement 1. Compute the total estimated indirect manufacturing cost for
2024.
Begin by selecting the formula to compute the total estimated overhead (OH) costs.
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|
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Total estimated
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×
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=
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overhead costs
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Now compute the total estimated indirect manufacturing cost for
2024.
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Total Estimated
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Activity
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Indirect Manufacturing Cost
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Materials handling
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Machine setup
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Insertion of parts
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Finishing
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|
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Total estimated indirect manufacturing cost
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|
Requirement 2. Prior to 2024, Elkin used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2024. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent.
First, select the formula, and then enter the amounts to compute the allocation rate.
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|
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÷
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=
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Allocation rate
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|
÷
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|
=
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|
Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.
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Indirect manufacturing cost per rim:
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Standard model:
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Deluxe model:
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Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2024. Carry each cost per unit to the nearest cent.
Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.)
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Allocated Mfg.
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Activity
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OH Cost Per Rim
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Standard
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Materials handling
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Machine setup
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Insertion of parts
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Finishing
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Total indirect cost per rim
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Allocated Mfg.
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OH Cost Per Rim
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Deluxe
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