Exercise 6-50 (Algo) Two-Stage Cost Allocation and Predetermined Rates (LO 6-1, 2, 3) Tacoma Accessories makes two laptop cases, Plastic and Leather, that require direct materials, direct labor, and overhead. The following data refer to operations expected for next quarter: Revenue Direct material Direct labor Overhead: Material handling overhead Fabrication overhead Plastic $ 560,000 260,000 140,000 Leather $ 580,000 340,000 120,000 Total $ 1,140,000 600,000 260,000 210,000 265,200 Tacoma uses a two-stage cost allocation system: It uses direct-material costs to allocate material handling overhead and direct labor costs to allocate fabrication overhead costs. Required:

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Exercise 6-50 (Algo) Two-Stage Cost Allocation and Predetermined Rates (LO 6-1, 2, 3)
Tacoma Accessories makes two laptop cases, Plastic and Leather, that require direct materials, direct labor, and overhead. The
following data refer to operations expected for next quarter:
Revenue
Direct material
Direct labor
Overhead:
Material handling overhead
Fabrication overhead
Plastic
$ 560,000
260,000
140,000
a. Material handling predetermined rate
b. Fabrication predetermined rate
Leather
$ 580,000
340,000
120,000
c. Total overhead (Plastic)
d. Total overhead (Leather)
Total
$ 1,140,000
Required:
a. Compute the material handling overhead rate for next quarter.
b. Compute the fabrication overhead rate for next quarter.
c. What is the total overhead allocated to the Plastic case next quarter?
d. What is the total overhead allocated to the Leather case next quarter?
Tacoma uses a two-stage cost allocation system: It uses direct-material costs to allocate material handling overhead and direct-
labor costs to allocate fabrication overhead costs.
600,000
260,000
210,000
265, 200
% of direct-materials cost
% of direct-labor cost
Transcribed Image Text:Exercise 6-50 (Algo) Two-Stage Cost Allocation and Predetermined Rates (LO 6-1, 2, 3) Tacoma Accessories makes two laptop cases, Plastic and Leather, that require direct materials, direct labor, and overhead. The following data refer to operations expected for next quarter: Revenue Direct material Direct labor Overhead: Material handling overhead Fabrication overhead Plastic $ 560,000 260,000 140,000 a. Material handling predetermined rate b. Fabrication predetermined rate Leather $ 580,000 340,000 120,000 c. Total overhead (Plastic) d. Total overhead (Leather) Total $ 1,140,000 Required: a. Compute the material handling overhead rate for next quarter. b. Compute the fabrication overhead rate for next quarter. c. What is the total overhead allocated to the Plastic case next quarter? d. What is the total overhead allocated to the Leather case next quarter? Tacoma uses a two-stage cost allocation system: It uses direct-material costs to allocate material handling overhead and direct- labor costs to allocate fabrication overhead costs. 600,000 260,000 210,000 265, 200 % of direct-materials cost % of direct-labor cost
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