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Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Standard Ultra Total 41,000 13,000 54,000 123,000 20,500 22,500 $ 3,097,000 2,520,000 22,500 $ 3,700,000 855,000 145,500 43,000 $ 6,797,000 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Account Amount Administration Engineering Machine operation and maintenance Miscellaneous Supervision Total $ 825,400 3,603,000 840,000 540,100 884,500 $ 6,693,000 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Standard Ultra Total 41,000 13,000 54,000 123,000 20,500 22,500 $ 3,097,000 2,520,000 22,500 $ 3,700,000 855,000 145,500 43,000 $ 6,797,000 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Account Amount Administration Engineering Machine operation and maintenance Miscellaneous Supervision Total $ 825,400 3,603,000 840,000 540,100 884,500 $ 6,693,000 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 69P: (Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for...
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Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Standard Ultra Total 41,000 13,000 54,000 123,000 20,500 22,500 $ 3,097,000 2,520,000 22,500 $ 3,700,000 855,000 145,500 43,000 $ 6,797,000 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Account Amount Administration Engineering Machine operation and maintenance Miscellaneous Supervision Total $ 825,400 3,603,000 840,000 540,100 884,500 $ 6,693,000 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.
Transcribed Image Text:Units produced Direct labor-hours used Machine-hours used Direct materials costs Direct labor costs Standard Ultra Total 41,000 13,000 54,000 123,000 20,500 22,500 $ 3,097,000 2,520,000 22,500 $ 3,700,000 855,000 145,500 43,000 $ 6,797,000 3,375,000 The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year: Account Amount Administration Engineering Machine operation and maintenance Miscellaneous Supervision Total $ 825,400 3,603,000 840,000 540,100 884,500 $ 6,693,000 The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor-hours. Required: a. Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system. b. An analyst on the planning process team suggests that a two-stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine-related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor-related overhead consists of the remaining manufacturing overhead. Machine-related costs would be allocated based on machine-hours. Labor-related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the system proposed by the analyst.
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