Chapter 17, Problem 10BE

a.

To determine

Allocate the utilities cost pool to each product line assuming by assuming deluxe model used as 6,400 machine- hours and the basic model used 1,600 machine-hours.

Answer to Problem 10BE

Calculate the utilities cost pool for each product line:

Particulars	Utilities Cost Allocated
Deluxe $\left(\$180,000\times 80\%(1)\right)$	$144,000
Basic $\left(\$180,000\times 20\%(2)\right)$	$36,000
Total  cost allocated	$180,000

(Table 1)

Explanation of Solution

Calculate the utilities cost pool to each product line assuming by assuming deluxe model used as 6,400 machine- hours and the basic model used 1,600 machine-hours.

Particulars	Machine hours	Percent to total
Deluxe	6,400	(1) 80%
Basic	1,600	(2) 20%
Total	8,000	100%

(Table 2)

Working note:

Calculate the percent of deluxe model machine hours:

$\begin{array}{c}\text{Percent of deluex model machine hours = }\frac{\text{Machine hours of deluxe model}}{\text{Total machine hours}}\times 100\\ =\frac{6,400}{8,000}\times 100\\ =80\%\end{array}$ (1)

Calculate the percent basic model machine hours:

$\begin{array}{c}\text{Percent of basic model machine hours = }\frac{\text{Machine hours of basic model}}{\text{Total machine hours}}\times 100\\ =\frac{1,600}{8,000}\times 100\\ =20\%\end{array}$ (2)

b.

To determine

Allocate the maintenance pool to each product line assuming by assuming deluxe model used as 50 work orders and the basic model used 150 work orders.

Answer to Problem 10BE

Calculate the maintenance pool for each product line:

Particulars	Maintenance cost Allocated
Deluxe $\left(\$240,000\times 25\%(3)\right)$	$60,000
Basic $\left(\$240,000\times 75\%(4)\right)$	$180,000
Total  cost allocated	$240,000

(Table 3)

Explanation of Solution

Calculate the maintenance pool to each product line assuming by assuming deluxe model used as 50 work orders and the basic model used 150 work orders.

Particulars	Work orders	Percent to total
Deluxe	50	(3) 25%
Basic	150	(4) 75%
Total	200	100%

(Table 4)

Working note:

Calculate the percent of deluxe model work orders:

$\begin{array}{c}\text{Percent of deluxe model work orders = }\frac{\text{Work orders of deluxe model}}{\text{Total work orders}}\times 100\\ =\frac{50}{200}\times 100\\ =25\%\end{array}$ (3)

Calculate the percent basic model work orders:

$\begin{array}{c}\text{Percent of basic model work orders = }\frac{\text{Work orders of basic model}}{\text{Total work orders}}\times 100\\ =\frac{150}{200}\times 100\\ =75\%\end{array}$ (4)

c.

To determine

Allocate the set –up pool to each product line by assuming that deluxe model used 30 production runs and the basic model used 70 production runs.

Answer to Problem 10BE

Calculate the set-up pool for each product line:

Particulars	Set-up cost Allocated
Deluxe $\left(\$60,000\times 30\%(5)\right)$	$18,000
Basic $\left(\$60,000\times 70\%(6)\right)$	$42,000
Total  cost allocated	$60,000

(Table 5)

Explanation of Solution

Calculate the set –up pool to each product line assuming by assuming deluxe model used as 30 production runs and the basic model used 70 production runs.

Particulars	Production Runs	Percent to total
Deluxe	30	(5) 30%
Basic	70	(6) 70%
Total	100	100%

(Table 6)

Working note:

Calculate the percent of deluxe model production runs:

$\begin{array}{c}\text{Percent of deluex model production runs = }\frac{\text{Production runs of deluxe model}}{\text{Total production runs}}\times 100\\ =\frac{30}{100}\times 100\\ =30\%\end{array}$ (5)

Calculate the percent basic model production runs:

$\begin{array}{c}\text{Percent of basic model production runs= }\frac{\text{Production runs of basic model}}{\text{Total production runs}}\times 100\\ =\frac{70}{100}\times 100\\ =70\%\end{array}$ (6)