Question

11. Several years after reengineering its production process, Zippy Corporation hired a new controller. Denise French (Click the icon to view additional information.) For the upcoming year, Zippy's budgeted ABC manufacturing overhead allocation rates are as follows: 2(Click the icon to view the additional data.) The number of parts is now a feasible allocation base because Zippy recently installed a plantwide computer system. Zippy produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as follows: $(Click the icon to view the additional data.) Read the requirements Requirement 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Enter the rates to two decimal places) Zippy Corporation Total Budgeted Indirect Manufacturing Costs Budgeted Quantity of Activity Cost Cost Allocation Base Allocation Rate Total Budgeted Indirect Cost Activity Materials handling Machine setups Insertion of parts Finishing T Total budgeted indirect cost Requirement 2. Compute the manufacturing overhead cost per Wheel of each model using ABC. (Round the cost allocation base to three decimals and cost per wheel to the nearest cent.) Zippy Corporation ABC Indirect Manufacturing Cost per Unit Cost Quantity of Cost Allocation Allocation Rate Base Used By: Standard Deluxe Activity Allocated Activity Cost Per Wheel Standard | Deluxe Materials handling Machine setup Insertion of parts Finishing Total ABC allocated indirect cost Requirement 3. Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. Begin by identifying the formula to compute the current plantwide manufacturing overhead rate, then compute the rate, (Round your answer to the nearest cent.) = Plantwide overhead rate per DL hour

Answer 1

Zippy Corporation Total Budgeted Indirect Manufacturing Costs Activity Budgeted Activity Quantity of Cost cost Allocation Allocation Base Rate Total Budget Indirect Cost Material handling Machine setups Insertion of parts Finishing Total budgeted indirect cost 10.000 40 10,000 3,800 $3.00 $30,000 $375.00 $15,000 $28.00 $280.000 $55.00 $209,000 $534,000 10,000 Workings: Number of parts [(4 * 1,000) + (6 * 1,000)] Number of setups (20+20) Finishing direct labor hours [(1.2* 1,000) + (2.6* 1,000)] 40 3.800 Activity Zippy Corporation ABC Indirect Manufacturing Cost per unit Quantity of Cost Cost Allocation Allocation Base Used Rate By: Standard Deluxe Allocation Activity Cost Per Wheel Standard Deluxe Material handling Machine setups Insertion of parts Finishing Total budgeted indirect cost $3.00 $375.00 $28.00 $55.00 4.000 0.020 4.000 1.200 6.000 0.020 6.000 2.600 $12.00 $18.00 $7.50 $7.50 $112.00 $168.00 $66.00 $143.00 $197.50 $336.50 Workings: per wheel machine setup (20 setup / 1,000 wheels) 0.020 3) Budgeted total manufacturing overhead cost $534,000 $534.000 1 / Budgeted total direct labor hours = [(2.1 * 1,000) + (3.9* 1,000)] 6.000 Plantwide overhead rate Plantwide overhead rate $89.00 per DL hour Direct labor hour 2.1 Standard Deluxe per direct labor hour $89.00 $89.00 Manufacturing overhead $186.90 $347.10 3.9