Sheffield Co. estimates that it will incur $1290000 of overhead costs each year in its three main departments, machining ($750000), inspections ($360000) and packing ($180000). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Sheffield's two products and their estimated use of cost drivers is as follows: Machining hours Inspections Orders packed Direct labor hours Product X $645000 O $446538 $642000 O $310500 1000 100 350 1700 Product Y 3000 500 650 1800 If ABC is used, how much overhead will be assigned to Product X?

Sheffield Co. estimates that it will incur $1290000 of overhead costs each year in its three main departments, machining ($750000), inspections ($360000) and packing ($180000). The machining department works 4000 hours per year, there are 600 inspections per year, and the packing department packs 1000 orders per year. Information about Sheffield's two products and their estimated use of cost drivers is as follows: Machining hours Inspections Orders packed Direct labor hours Product X $645000 O $446538 $642000 O $310500 1000 100 350 1700 Product Y 3000 500 650 1800 If ABC is used, how much overhead will be assigned to Product X?

Name: Sheffield Co. estimates that it will incur $1290000 of overhead costs
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Description: Sheffield Co. estimates that it will incur $1290000 of overhead costs each year in its three main departments, machining ($750000),inspections ($360000) and packing ($180000). The machining department works 4000 hours per year, there are 600 inspect

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Sheffield Co. estimates that it will incur $1290000 of overhead costs each year in its three main departments, machining ($750000),
inspections ($360000) and packing ($180000). The machining department works 4000 hours per year, there are 600 inspections per
year, and the packing department packs 1000 orders per year. Information about Sheffield's two products and their estimated use of
cost drivers is as follows:
Machining hours
Inspections
Orders packed
Direct labor hours
Product X
$645000
O $446538
$642000
O $310500
1000
100
350
1700
Product Y
3000
500
650
1800
If ABC is used, how much overhead will be assigned to Product X?

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