Required: 1. SupposeKeller uses a traditionalcosting system withmachine hours as the costdriver. Determine the amount of overheadassigned to each product line. Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production informationfollows:Direct materials cost per unitDirect labor cost per unitSales price per unitExpected production per monthSetup costsQuality controlMaintenanceTotalSandy Beach$19.6014.7082.501,160 unitsKeller has monthly overhead of $11,364, which is divided into the following cost pools:$ 2,4405,9083,016$ 11,364Number of setupsNumber of inspectionsNumber of machine hoursRocky River$ 27.3018.50105.00970 unitsThe company has also compiled the following information about the chosen cost drivers:Sandy Beach Rocky River10301803251,3001,300Total405052,600

The pre-determined overhead rate is calculated as the estimated overhead costs divided by the…

Answered: Required: 1. Suppose Keller uses a…

Required: 1. Suppose Keller uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Required: 1. Suppose
Keller uses a traditional
costing system with
machine hours as the cost
driver.
Determine the amount of overhead
assigned to each product line.

Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information
follows:
Direct materials cost per unit
Direct labor cost per unit
Sales price per unit
Expected production per month
Setup costs
Quality control
Maintenance
Total
Sandy Beach
$19.60
14.70
82.50
1,160 units
Keller has monthly overhead of $11,364, which is divided into the following cost pools:
$ 2,440
5,908
3,016
$ 11,364
Number of setups
Number of inspections
Number of machine hours
Rocky River
$ 27.30
18.50
105.00
970 units
The company has also compiled the following information about the chosen cost drivers:
Sandy Beach Rocky River
10
30
180
325
1,300
1,300
Total
40
505
2,600

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