Question

Exercise 4-5 (Video) (Part Level Submission) Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead. Mobile Safes Walk-In Safes 200 300 200 Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line 450 800 1,700 (a) 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, eg. 12.25.) (1) One mobile safe per unit (2) One walk-in safe per unit By accessing this question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER (61) The parts of this question must be completed in order. This part will be available when you complete the part above

Answer 1

Solution a:

Predetermined overhead rate = Estimated overhead / Estimated direct labor hours

= $260,000 / 2500 = $104 per labor hour

Manufacturing overhead assigned to one mobile safe = (800*$104) / 200 = $416 per unit

Manufacturing overhead assigned to one walk in safe = (1700*$104) / 50 = $3,536 per unit