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. a. Overhead rate per machine hour b. Machine depreciation per machine hour Setup labor Material handling per production run % direct material cost
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. a. Overhead rate per machine hour b. Machine depreciation per machine hour Setup labor Material handling per production run % direct material cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text: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.
а.
Overhead rate
per machine hour
b.
Machine depreciation
per machine hour
Setup labor
per production run
Material handling
% direct material cost

Transcribed Image Text: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
Direct materials cost per unit
Machine hours per unit
Production runs per month
1,000
$
1
10,000
$
4
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
Setup labor
Material handling
$36,000
18,000
14,400
$68,400
Total
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