Exercise 9-38 and 9-39 (Static) Skip to question Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 36,000 Setup labor 18,000 Material handling 14,400 Total $ 68,400 Exercise 9-38 (Static) Activity-Based Costing and Cost Driver Rates (LO 9-4) Required: a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.) b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.
Exercise 9-38 and 9-39 (Static) Skip to question Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2 Units produced 10,000 1,000 Direct materials cost per unit $ 2 $ 4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation $ 36,000 Setup labor 18,000 Material handling 14,400 Total $ 68,400 Exercise 9-38 (Static) Activity-Based Costing and Cost Driver Rates (LO 9-4) Required: a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.) b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 9-38 and 9-39 (Static)
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Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow.
| V-1 | V-2 | |||||
| Units produced | 10,000 | 1,000 | ||||
| Direct materials cost per unit | $ | 2 | $ | 4 | ||
| Machine hours per unit | 1 | 2 | ||||
| Production runs per month | 80 | 40 | ||||
Production at the plant is automated and any labor cost is included in
| Machine |
$ | 36,000 | |
| Setup labor | 18,000 | ||
| Material handling | 14,400 | ||
| Total | $ | 68,400 | |
Exercise 9-38 (Static) Activity-Based Costing and Cost Driver Rates (LO 9-4)
Required:
a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.)
b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.
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