Exercise 12-8A (Algo) Allocating costs among products LO 12-3 Rundle Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Home 1 $ 75,000 91,000 Home 2 $ 106,000 139,000 Home 3 $ 172,000 195,000 Assume Rundle needs to allocate two major overhead costs ($35,300 of employee fringe benefits and $21,250 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. Note: Round "Allocation rate" to 2 decimal places. Fringe Benefits: Home Allocation Rate x Weight of Base =Allocated Cost 1 = 2 x = 3 x = Total Indirect Materials: Home Allocation Rate x Weight of Base Allocated Cost 1 x = 2 x = 3 x Total The cost components to determine the total cost of each house: Expected Costs Direct labor Direct materials Fringe benefits Indirect materials Total cost Home 1 Home 2 Home 3 Total

Exercise 12-8A (Algo) Allocating costs among products LO 12-3 Rundle Construction Company expects to build three new homes during a specific accounting period. The estimated direct materials and labor costs are as follows. Expected Costs Direct labor Direct materials Home 1 $ 75,000 91,000 Home 2 $ 106,000 139,000 Home 3 $ 172,000 195,000 Assume Rundle needs to allocate two major overhead costs ($35,300 of employee fringe benefits and $21,250 of indirect materials costs) among the three jobs. Required Choose an appropriate cost driver for each of the overhead costs and determine the total cost of each house. Note: Round "Allocation rate" to 2 decimal places. Fringe Benefits: Home Allocation Rate x Weight of Base =Allocated Cost 1 = 2 x = 3 x = Total Indirect Materials: Home Allocation Rate x Weight of Base Allocated Cost 1 x = 2 x = 3 x Total The cost components to determine the total cost of each house: Expected Costs Direct labor Direct materials Fringe benefits Indirect materials Total cost Home 1 Home 2 Home 3 Total

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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Question 4.4 Dundar Mifflin makes electronic products for the RCMP. The following data is for the first six months: Direct Labor Hours Manufacturing Overhead $295,000 $320,000 January 45,000 60,000 57,000 52,000 February March $323,000 April May $247,250 $178,200 $162,500 34,000 June 25,000 Submission Instructions: 1. Use the high-low method to estimate the cost formula 2. Estimate the total overhead cost at an activity level of 48,000 machine hours, using the separate estimates you obtained for its components.
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