Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Setting up machines Assembling Inspection Assembling Estimated Overhead Costs $228,000 380,000 273,600 Setting up machines $ Inspection Compute the activity-based overhead rates for these three cost pools. $ $ Estimated Use of Cost Drivers 1,000 setups 76,000 labor hours 1,200 inspections Overhead Rates /setup /DLH /inspection

Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Setting up machines Assembling Inspection Assembling Estimated Overhead Costs $228,000 380,000 273,600 Setting up machines $ Inspection Compute the activity-based overhead rates for these three cost pools. $ $ Estimated Use of Cost Drivers 1,000 setups 76,000 labor hours 1,200 inspections Overhead Rates /setup /DLH /inspection

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sampson Jewelry Corporation manufactures custom jewelry. In the past, Sampson has been using a traditional overhead allocation system based solely on direct labor hours. Sensing that this system was distorting costs and selling prices, Sampson has decided to switch to an activity-based costing system using three activity cost pools. Information on these activity cost pools are as follows: Activity Cost Pool Total Cost Total Activity Labor Related $40,000 8,000 Direct labor hours Machine Related $50,000 12,500 Machine Hours Quality Control $12,000 800 Inspections Sampson has received an order and will complete as Job #309 and expect to incur $900 of direct material, 30 hours of direct labor at $40 per hour, 80 machine hours, and 5 inspections. Sampson needs a markup of 40% on the job.Required:A). Calculate the activity rate and compute is the expected cost of job#309 under the activity-based costing system? What should be the quote on this job?…
Carter, Incorporated, produces two products, Product A and Product B. Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base. Carter is considering switching to an ABC system by splitting its manufacturing overhead cost across three activities: Design, Production, and Inspection. The cost of each activity and usage of the cost drivers are as follows: Activity Pool (Driver) Design (engineering hours) Production (direct labor hours) Inspection (batches) Cost of Pool $ 300,000 500,000 200,000 300,000 100 Carter manufactures 10,000 units of Product A and 7,500 units of Product B per month. Required: a. Calculate the predetermined overhead rate under the traditional costing system. b. Calculate the activity rate for Design. c. Calculate the activity rate for Machining. d. Calculate the activity rate for Inspection. e. Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. f.…
implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system Driver and guard wages Vehicle operating expense Vehicle depreciation. Customer representative salaries and i expenses office expenses Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses office expenses Administrative expenses Administrative expenses Total cost The distribution of resource consumption across the activity cost pools is as follows. Pickup and Delivery 35% 5% $1,000,000 510,000 390,000 Driver and guard wages Vehicle…
The following figure depicts the complete system that Office Inc. uses to estimate the total cost of each office desk and office chair that it produces. How many cost pools does Office Inc.'s 2-stage costing system use for Office Chair objects? A. 7 B. 0 C. 6 D. 5 E. 4 F. 2 G. 1 H. 3 I. 8
Do not give answer in image
Overhead application to costs is a critical issue for the costing of your products. We are studying several ways to handle this situation. What would cause an overhead to be overapplied, or underapplied. Discuss the results to your decision making and the financial statements for each of those two situations.
Answer the following 3 questions:
Please help me with Req 4. If someone can help I will give a thumbs up. If you zoom in I believe the image should beome clearer. Thanks!
The cost accountant for M. Company wants to determine the cost of factory overhead. Based on observation and discussions with plant workers, you feel that five accounts are most relevant. Two are fixed- supervisory salaries and depreciation- and the remaining three are variable. Indirect labor is primarily used to move materials and varies with a number of moves. The largest component of utilities is electricity to run production machinery; which is driven by machine hours. Purchasing seems to be driven by the number of purchase orders. The accounts and their balances for the past six months are shown below: Indirect Plant and Labor Supervisory Equipment Cost Utilities Purchasing Salaries Depreciation July $14,250 $12,000 $38,200 $20,000 $6,500 Aug 15,800 10,600 35,400 23,000…