Wildhorse Corp. reported the following detail for its budgeted MOH costs, broken into three key activities Activity Material handling Machining Inspections Total Budgeted Cost $50,000 Material handling Plant-wide MOH rate $ Machining Inspections 100,000 (a) Calculate Wildhorse's plant-wide MOH rate if allocations are based on machine hours. (Round answer to 2 decimal places, e.g. 15.25.) $ 36,000 $186,000 $ (b) Calculate activity rates for each key activity. $ Budgeted Quantity of Cost Driver material moves 10,000 machine hours inspections 2,000 4,000 Activity rate /machine hour /material move /machine hour /inspection

Wildhorse Corp. reported the following detail for its budgeted MOH costs, broken into three key activities Activity Material handling Machining Inspections Total Budgeted Cost $50,000 Material handling Plant-wide MOH rate $ Machining Inspections 100,000 (a) Calculate Wildhorse's plant-wide MOH rate if allocations are based on machine hours. (Round answer to 2 decimal places, e.g. 15.25.) $ 36,000 $186,000 $ (b) Calculate activity rates for each key activity. $ Budgeted Quantity of Cost Driver material moves 10,000 machine hours inspections 2,000 4,000 Activity rate /machine hour /material move /machine hour /inspection

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 38P: Friendly Bank is attempting to determine the cost behavior of its small business lending operations....

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Wildhorse Corp. reported the following detail for its budgeted MOH costs, broken into three key activities.
Activity
Material handling
Machining
Inspections
Total
Plant-wide MOH rate
Material handling
Budgeted Cost
$50,000
100,000
36,000 4,000
Machining
Inspections
$
(a) Calculate Wildhorse's plant-wide MOH rate if allocations are based on machine hours. (Round answer to 2 decimal places, e.g. 15.25.)
(b) Calculate activity rates for each key activity.
$
$186,000
$
SA
Budgeted Quantity of
Cost Driver
$
2,000
10,000
material moves
Activity rate
machine hours
inspections
/machine hour
/material move
/machine hour
/inspection

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