Fletcher, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have...
Fletcher, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2018 and their allocation bases are asfollows:
|
Activity |
Total Budgeted Cost |
Allocation Base |
||
|
Materials handling |
$3,000 |
Number of parts |
||
|
Machine setup |
3,000 |
Number of setups |
||
|
Insertion of parts |
52,000 |
Number of parts |
||
|
Finishing |
72,000 |
Finishing direct labor hours |
||
|
Total |
$130,000 |
|||
Fletcher expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,500 parts, require 5 setups, and consume 1,200 hours of finishing time.
Requirement 1. Compute the predetermined overhead allocation rate for each activity.
Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.)
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Predetermined OH |
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/ |
= |
allocation rate |
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Materials handling |
/ |
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= |
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Machine setup |
/ |
|
= |
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Insertion of parts |
/ |
= |
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Finishing |
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/ |
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= |
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Requirement 2. Compute the expected indirect manufacturing cost of each bumper.
Begin by selecting the formula to allocate overhead (OH) costs.
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x |
|
= |
Allocated mfg. overhead costs |
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Now compute the expected indirect manufacturing cost of each bumper. (Round the cost per bumper to the nearest cent.)
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Allocated Mfg. OH Cost |
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Materials handling |
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|
Machine setup |
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Insertion of parts |
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Finishing |
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Total mfg. OH costs |
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Number of bumpers |
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Mfg. OH cost per bumper |
Homework Answers
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