Question

Required A Required B Required C Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. (Round "Using machines" and "Packing & shipping" answers to 2 decimal places.) Allocation Rate per run per order per lb. Activity Setting up production Processing orders Handling materials Using machines Performing quality management Packing & shipping Direct labor-hour rate per hour per insp. per unit per hour

Answer 1

Answer to Question a and b:

Question a Activity Setting up production Processing orders Handling materials Using machines Activity Cost Dri Calculation Cost Activity rate (36,000/100) (60,000/200) (24,000/8,000) (72,000/10,000) 360 per run 300 per order 3 per lb. 7.20 per hour $ 36,000 100 runs $ $ 60,000 200 orders 24,000 8000 pounds $ $ 72,000 10,000 hours Performing quality 60,000 40 inspections $ 48,000 20,000 units 2,000 direct 300,000 labor hours 1,500 per inspection (60,000/40,000) 2.40 per unit management Packing and shipping $ (48,000/20,000) $ (300,000/2,000) 150 per hour $ $ Direct Labor Hour rate Total Overheads 600,000 Question b Tall Short Medium 6,000 $ 3,000 $ (100 X $30) 15,000 $ (100 X $150) (120 X $150) 24,000 $ 3,750 $ 3,600 $ $ Direct Materials 3,000 Direct Labor $ 3,300 (120 X $30) (110 X $30) Calculation 18,000 $ $ Overhead 16,500 Calculation Total Cost (110 X $150) 25,350 $ 22,800 (6,000 3,000 (3,750 3,600 (3,000 3,300 18,000) Calculation 16,500) 15,000)

Answer to Question c:

Question c Tall Short Medium Direct Materials Direct Labor Calculation Setting up production $ Calculation Processing orders Calculation OHandling materials Calculation Using machines BCalculation 6,000 $ 3,000 $ (120 X $30) 3,750 3,000 3,600 3,300 (110 X $30) (100 X $30) 720 $ 1,440 2,880 ($360 X 4) 2,400 $ ($300 X 8) 2,400 $ ($3 X 800) 2,160 $ ($7.20 X 300) ($7.20 X 300) ($360 X 2) ($360 X 8) 2,400 $ 1,200 ($300 X 8) ($300 X 4) 1,200 $ $ 600 ($3 X 400) ($3 X 200) 3,600 $ 2,160 ($7.20 X 500) Performing quality 3,000 $ ($1500 X 2) 1,200 $ ($2.40 X 1000) ($2.40 X 500) ($2.40 X 300) 19,950 $ 3,000 $ 3,000 management ($1500 X 2) ($1500 X 2) Calculation Packing and shipping Calculation $ 720 2,400 3 Total Cost 22,320 $ 16,860