Swifty Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. The information shown below relates to overhead. Mobile Safes Walk-in Safes 200 50 300 450 Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line (a) ✓ Your answer is correct. (1) One mobile safe $ (2) One walk-in safe eTextbook and Media The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25) (61) (a) (b) One mobile safe $ One walk-in safe 800 $ $ 416 The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, eg. 12.25.) What amount of materials handling costs are assigned to: 200 350 3,536 1,700 per unit per unit each each
Swifty Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be assigned to each product line. The information shown below relates to overhead. Mobile Safes Walk-in Safes 200 50 300 450 Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line (a) ✓ Your answer is correct. (1) One mobile safe $ (2) One walk-in safe eTextbook and Media The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, e.g. 12.25) (61) (a) (b) One mobile safe $ One walk-in safe 800 $ $ 416 The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for materials handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC): (Round answers to 2 decimal places, eg. 12.25.) What amount of materials handling costs are assigned to: 200 350 3,536 1,700 per unit per unit each each
Chapter1: Financial Statements And Business Decisions
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![### Manufacturing Overhead Allocation for Swifty Corporation
Swifty Corporation manufactures safes, including large mobile safes and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. This analysis involves estimating the amount of overhead to be assigned to each product line. The following table provides relevant information related to overhead allocation:
#### Product Information
| | **Mobile Safes** | **Walk-in Safes** |
|------------------------------|------------------|-------------------|
| **Units planned for production** | 200 | 50 |
| **Material moves per product line** | 300 | 200 |
| **Purchase orders per product line** | 450 | 350 |
| **Direct labor hours per product line** | 800 | 1,700 |
### Overhead Allocation Calculation
#### (a) Traditional Costing Method
Under the traditional costing method, which assigns overhead on the basis of direct labor hours, the total estimated manufacturing overhead is $260,000.
The overhead costs per unit for each type of safe can be calculated as follows:
1. **One Mobile Safe**: $416 per unit
2. **One Walk-in Safe**: $3,536 per unit
#### (b1) Activity-Based Costing (ABC)
The total estimated manufacturing overhead of $260,000 is divided into $160,000 for materials handling costs and $100,000 for purchasing activity costs. The ABC method allocates these costs more accurately based on actual activities involved in production.
Using ABC, materials handling costs are allocated as follows:
- **One Mobile Safe**: [To be filled]
- **One Walk-in Safe**: [To be filled]
### Diagrams/Graphs Explanation
#### Diagram Explanation:
- **Table 1**: The initial table shows the planned production quantities, material moves, purchase orders, and direct labor hours required for both mobile and walk-in safes.
- **Calculation Table**: This section demonstrates the values derived for overhead costs per unit using the traditional costing method.
- **Activity-Based Costing Breakdown**: This table details the allocation of materials handling costs per product under the ABC method.
### Summary
Swifty Corporation uses both traditional and activity-based costing methods to allocate overhead costs to its products. This analysis helps in understanding which method provides a more accurate distribution of overhead costs, ultimately aiding in better budgeting and](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff98f55b6-fded-4707-ac4b-326c022c9142%2Fd92691d9-992d-4b7a-ad83-7581d1adf7ad%2F592afk_processed.png&w=3840&q=75)
Transcribed Image Text:### Manufacturing Overhead Allocation for Swifty Corporation
Swifty Corporation manufactures safes, including large mobile safes and large walk-in stationary bank safes. As part of its annual budgeting process, Swifty is analyzing the profitability of its two products. This analysis involves estimating the amount of overhead to be assigned to each product line. The following table provides relevant information related to overhead allocation:
#### Product Information
| | **Mobile Safes** | **Walk-in Safes** |
|------------------------------|------------------|-------------------|
| **Units planned for production** | 200 | 50 |
| **Material moves per product line** | 300 | 200 |
| **Purchase orders per product line** | 450 | 350 |
| **Direct labor hours per product line** | 800 | 1,700 |
### Overhead Allocation Calculation
#### (a) Traditional Costing Method
Under the traditional costing method, which assigns overhead on the basis of direct labor hours, the total estimated manufacturing overhead is $260,000.
The overhead costs per unit for each type of safe can be calculated as follows:
1. **One Mobile Safe**: $416 per unit
2. **One Walk-in Safe**: $3,536 per unit
#### (b1) Activity-Based Costing (ABC)
The total estimated manufacturing overhead of $260,000 is divided into $160,000 for materials handling costs and $100,000 for purchasing activity costs. The ABC method allocates these costs more accurately based on actual activities involved in production.
Using ABC, materials handling costs are allocated as follows:
- **One Mobile Safe**: [To be filled]
- **One Walk-in Safe**: [To be filled]
### Diagrams/Graphs Explanation
#### Diagram Explanation:
- **Table 1**: The initial table shows the planned production quantities, material moves, purchase orders, and direct labor hours required for both mobile and walk-in safes.
- **Calculation Table**: This section demonstrates the values derived for overhead costs per unit using the traditional costing method.
- **Activity-Based Costing Breakdown**: This table details the allocation of materials handling costs per product under the ABC method.
### Summary
Swifty Corporation uses both traditional and activity-based costing methods to allocate overhead costs to its products. This analysis helps in understanding which method provides a more accurate distribution of overhead costs, ultimately aiding in better budgeting and
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