Stacks manufactures two different models of hockey sticks: the Standard and the Slap Shot. The total overhead of $600,000 has traditionally been allocated by direct labor hours, with 400,000 hours for the Standard and 200,000 hours for the Slap Shot. After analyzing and assigning costs to two cost pools, it was determined that machine hours is estimated to have $450,000 of overhead, with 30,000 hours used on the Standard model and 15,000 hours used on the Slap Shot model. It was also estimated that the setup cost pool would have $150,000 of overhead, with 25,000 hours for the Standard and 5,000 hours for the Slap Shot. PLEASE NOTE: Predetermined overhead rates will be rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). The rates will include their proper label according to the textbook examples (no abbreviations). All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). 1. What is the overhead cost per product, under traditional costing? Predetermined Overhead Rate = Overhead for the Standard Model = Overhead for the Slap Shot Model = 2. What is the overhead cost per product, under ABC costing? Machine Pool: Predetermined Overhead Rate = Setup Pool: Predetermined Overhead Rate = 3. Cost Pool Standard Model Slap Shot Model Machine Pool Setup Pool Total Overhead

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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Stacks manufactures two different models of hockey sticks: the Standard and the Slap Shot. The total overhead of $600,000 has traditionally been allocated by direct labor hours, with 400,000 hours for the Standard and 200,000 hours for the Slap Shot.

After analyzing and assigning costs to two cost pools, it was determined that machine hours is estimated to have $450,000 of overhead, with 30,000 hours used on the Standard model and 15,000 hours used on the Slap Shot model. It was also estimated that the setup cost pool would have $150,000 of overhead, with 25,000 hours for the Standard and 5,000 hours for the Slap Shot.

PLEASE NOTE: Predetermined overhead rates will be rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). The rates will include their proper label according to the textbook examples (no abbreviations). All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).

1. What is the overhead cost per product, under traditional costing?

Predetermined Overhead Rate =
Overhead for the Standard Model =
Overhead for the Slap Shot Model =

2. What is the overhead cost per product, under ABC costing?

Machine Pool: Predetermined Overhead Rate =
Setup Pool: Predetermined Overhead Rate =

Cost Pool	Standard Model	Slap Shot Model
Machine Pool
Setup Pool
Total Overhead

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