Perfect Personalization is a company that designs and manufactures custom apparel for corporate events. Below is a list of the company's costs – the $ amount in parentheses is the total 2021 cost. PART A: CLASSIFYING COSTS Classify each cost as (a) Variable or Fixed and (b) Product or Period. I've completed the first one for you. Variable Cost Product Cost or Fixed Cost? or Period Cost? Depreciation on equipment at headquarters ($21,000). Fixed Period Depreciation on manufacturing equipment ($158,000). Cost of utilities at manufacturing plant ($26,000).* Cost of utilities at headquarters ($3,000).* Cost of advertising ($105,000). Shipping costs paid to UPS for order delivery ($40,000). Cost of fabric and thread ($2,700,000). Salary paid to CEO ($600,000).** Salaries paid to plant managers ($380,000).* Hourly wages paid to line workers at plant ($2,850,0o0).** Hourly wages paid to administrative staff ($140,000).** * Perfect Personalization's utility company charges solely based on usage (i.e., there is no flat-fee component). ** Perfect Personalization is able to adjust the hours worked by line workers and administrative staff based on the number of orders. The plant production manager and CEO are paid a yearly salary. PART B: CALCULATING & USING PRE-DETERMINED OVERHEAD RATE Included in this cost pool are Perfect Personalization pools overhead costs together into one cost poo (1) plant manager salaries ($380,000), (2) depreciation on manufacturing equipment ($158,000), and (3) utilities at the manufacturing plant ($26,000). The cost driver used to allocate overhead is direct labor hours; the company estimates there will be 60,000 total direct labor hours in 2021. Perfect Personalization's 2021 pre-determined overhead rate per direct labor hour %3D During 2021, Comcast places an order with Perfect Personalization for 5,000 custom sweatshirts for its corporate retreat. The direct materials cost for this order is $20,240 and the direct labor cost for this order is $22,630. It takes 200 direct labor hours to complete the job. Total OVERHEAD costs Perfect Personalization allocates to the Comcast job Perfect Personalization's cost per sweatshirt for the Comcast job

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Perfect Personalization is a company that designs and manufactures custom apparel for corporate
events. Below is a list of the company's costs – the $ amount in parentheses is the total 2021 cost.
PART A: CLASSIFYING COSTS
Classify each cost as (a) Variable or Fixed and (b) Product or Period. I've completed the first one for you.
Variable Cost
Product Cost
or Fixed Cost?
or Period Cost?
Depreciation on equipment at headquarters ($21,000).
Fixed
Period
Depreciation on manufacturing equipment ($158,000).
Cost of utilities at manufacturing plant ($26,000).*
Cost of utilities at headquarters ($3,000).*
Cost of advertising ($105,000).
Shipping costs paid to UPS for order delivery ($40,000).
Cost of fabric and thread ($2,700,000).
Salary paid to CEO ($600,000).**
Salaries paid to plant managers ($380,000).**
Hourly wages paid to line workers at plant ($2,850,0o0).**
Hourly wages paid to administrative staff ($140,000).**
* Perfect Personalization's utility company charges solely based on usage (i.e., there is no flat-fee component).
** Perfect Personalization is able to adjust the hours worked by line workers and administrative staff based on the
number of orders. The plant production manager and CEO are paid a yearly salary.
PART B: CALCULATING & USING PRE-DETERMINED OVERHEAD RATE
Perfect Personalization pools overhead costs together into one cost pool. Included in this cost pool are
(1) plant manager salaries ($380,000), (2) depreciation on manufacturing equipment ($158,000), and (3)
utilities at the manufacturing plant ($26,000). The cost driver used to allocate overhead is direct labor
hours; the company estimates there will be 60,000 total direct labor hours in 2021.
Perfect Personalization's 2021 pre-determined overhead rate
2$
per direct labor hour
During 2021, Comcast places an order with Perfect Personalization for 5,000 custom sweatshirts for its
corporate retreat. The direct materials cost for this order is $20,240 and the direct labor cost for this
order is $22,630. It takes 200 direct labor hours to complete the job.
Total OVERHEAD costs Perfect Personalization allocates to the Comcast job
Perfect Personalization's cost per sweatshirt for the Comcast job
Transcribed Image Text:Perfect Personalization is a company that designs and manufactures custom apparel for corporate events. Below is a list of the company's costs – the $ amount in parentheses is the total 2021 cost. PART A: CLASSIFYING COSTS Classify each cost as (a) Variable or Fixed and (b) Product or Period. I've completed the first one for you. Variable Cost Product Cost or Fixed Cost? or Period Cost? Depreciation on equipment at headquarters ($21,000). Fixed Period Depreciation on manufacturing equipment ($158,000). Cost of utilities at manufacturing plant ($26,000).* Cost of utilities at headquarters ($3,000).* Cost of advertising ($105,000). Shipping costs paid to UPS for order delivery ($40,000). Cost of fabric and thread ($2,700,000). Salary paid to CEO ($600,000).** Salaries paid to plant managers ($380,000).** Hourly wages paid to line workers at plant ($2,850,0o0).** Hourly wages paid to administrative staff ($140,000).** * Perfect Personalization's utility company charges solely based on usage (i.e., there is no flat-fee component). ** Perfect Personalization is able to adjust the hours worked by line workers and administrative staff based on the number of orders. The plant production manager and CEO are paid a yearly salary. PART B: CALCULATING & USING PRE-DETERMINED OVERHEAD RATE Perfect Personalization pools overhead costs together into one cost pool. Included in this cost pool are (1) plant manager salaries ($380,000), (2) depreciation on manufacturing equipment ($158,000), and (3) utilities at the manufacturing plant ($26,000). The cost driver used to allocate overhead is direct labor hours; the company estimates there will be 60,000 total direct labor hours in 2021. Perfect Personalization's 2021 pre-determined overhead rate 2$ per direct labor hour During 2021, Comcast places an order with Perfect Personalization for 5,000 custom sweatshirts for its corporate retreat. The direct materials cost for this order is $20,240 and the direct labor cost for this order is $22,630. It takes 200 direct labor hours to complete the job. Total OVERHEAD costs Perfect Personalization allocates to the Comcast job Perfect Personalization's cost per sweatshirt for the Comcast job
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