Forsythe, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: 1(Click the icon to view the budgeted costs and activity bases.) Read the requirements2. Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH (1) ÷ (2) = allocation rate Materials handling ÷ = Machine setup ÷ = Insertion of parts ÷ = Finishing ÷ = Requirement 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. Begin by selecting the formula to allocate overhead (OH) costs. (3) × (4) = Allocated mfg. overhead costs Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.) Job 86: Allocated Mfg. OH Cost Materials handling Machine setup Insertion of parts Finishing Total mfg. OH costs 1: Data Table Activity Total Budgeted Cost Allocation Base Materials handling $14,000 Number of parts Machine setup 4,200 Number of setups Insertion of parts 52,000 Number of parts Finishing 78,000 Finishing direct labor hours Total $148,200 Forsythe expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,000 parts, require 5 setups, and consume 2,000 hours of finishing time. 2: Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (1) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (2) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (3) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate (4) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate
Forsythe, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: 1(Click the icon to view the budgeted costs and activity bases.) Read the requirements2. Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH (1) ÷ (2) = allocation rate Materials handling ÷ = Machine setup ÷ = Insertion of parts ÷ = Finishing ÷ = Requirement 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. Begin by selecting the formula to allocate overhead (OH) costs. (3) × (4) = Allocated mfg. overhead costs Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.) Job 86: Allocated Mfg. OH Cost Materials handling Machine setup Insertion of parts Finishing Total mfg. OH costs 1: Data Table Activity Total Budgeted Cost Allocation Base Materials handling $14,000 Number of parts Machine setup 4,200 Number of setups Insertion of parts 52,000 Number of parts Finishing 78,000 Finishing direct labor hours Total $148,200 Forsythe expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,000 parts, require 5 setups, and consume 2,000 hours of finishing time. 2: Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (1) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (2) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (3) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate (4) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
Forsythe,
Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows:1(Click
the icon to view the budgeted costs and activity bases.)Read the
requirements2.
Requirement 1. Compute the predetermined overhead allocation rate for each activity.
Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.)
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Predetermined OH
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(1)
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÷
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(2)
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=
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allocation rate
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Materials handling
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÷
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=
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Machine setup
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÷
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=
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Insertion of parts
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÷
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=
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Finishing
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÷
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=
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Requirement 2. Job 86 required the production of
manufacturing cost allocated to Job 86.
140
bumpers and required one setup. Compute the indirect Begin by selecting the formula to allocate overhead (OH) costs.
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(3)
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×
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(4)
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=
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Allocated mfg. overhead costs
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Job 86 required the production of
140
bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.)|
Job 86:
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Allocated Mfg. OH 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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Total mfg. OH costs
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1: Data Table
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Activity
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Total Budgeted Cost
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Allocation Base
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Materials handling
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$14,000
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Number of parts
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Machine setup
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4,200
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Number of setups
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Insertion of parts
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52,000
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Number of parts
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Finishing
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78,000
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Finishing direct labor hours
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Total
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$148,200
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Forsythe
expects to produce
500
chrome bumpers during the year. The bumpers are expected to use
2,000
parts, require
5
setups, and consume
2,000
hours of finishing time.2: Requirements
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1.
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Compute the predetermined overhead allocation rate for each activity.
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2.
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Job 86 required the production of
140
bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. |
(1)
Actual overhead costs
Actual qty of the allocation base used
Estimated overhead costs
Estimated qty of the allocation base
(2)
Actual overhead costs
Actual qty of the allocation base used
Estimated overhead costs
Estimated qty of the allocation base
(3)
Actual overhead costs
Estimated overhead costs
Expected qty of the allocation base used
Predetermined OH allocation rate
(4)
Actual overhead costs
Estimated overhead costs
Expected qty of the allocation base used
Predetermined OH allocation rate
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