1 | Manufacturing overhead rate=Total manufacturing overhead/Total machine hours=317250/(90+2000+910)=317250/3000=$105.75 per machine hour | |||
Overhead allocated=Machine hours used*Manufacturing overhead rate | ||||
Customer | Machine hours used | Overhead allocated | ||
a | a*105.75 | |||
Northern motors | 90 | 9518 | ||
Hamlet motors | 2000 | 211500 | ||
Jarrin auto | 910 | 96233 |
2 | Manufacturing overhead by department=Manufacturing overhead in the department/Total cost drivers | ||||||||
Department | Manufacturing overhead | Cost driver | Total cost driver | Manufacturing overhead rate by department | |||||
a | b | a/b | |||||||
Design | 44100 | CAD-Design-hours | 420 | 105 | Per CAD-Design-hour | ||||
(120+210+90) | |||||||||
Engineering | 33150 | Engineering-hours | 390 | 85 | Per Engineering-hour | ||||
(80+50+260) | |||||||||
Production | 240000 | Machine-hours | 3000 | 80 | Per machine-hour |
Department | Northern motors | Hamlet motors | Jarrin auto | Total | |||||||
Manufacturing overhead rate | Usage of cost driver | Overhead allocated | Manufacturing overhead rate | Usage of cost driver | Overhead allocated | Manufacturing overhead rate | Usage of cost driver | Overhead allocated | |||
a | b | c=a*b | d | e | f=d*e | g | h | i=g*h | c+f+i | ||
Design | 105 | 120 | 12600 | 105 | 210 | 22050 | 105 | 90 | 9450 | 44100 | |
Engineering | 85 | 80 | 6800 | 85 | 50 | 4250 | 85 | 260 | 22100 | 33150 | |
Production | 80 | 90 | 7200 | 80 | 2000 | 160000 | 80 | 910 | 72800 | 240000 | |
26600 | 186300 | 104350 | 317250 |
3 | Overhead allocated: | |||||
Northern motors | Hamlet motors | Jarrin auto | ||||
Simple-costing system | 9518 | 211500 | 96233 | |||
Department-based rates | 26600 | 186300 | 104350 |
Under the simple-costing system,Hamlet motors was likely unhappy about their bill,because the contract appears to have been overpriced. |
If the new department-based rates are used to price contracts,Hamlet motors will likely be happier about their bill |
If the new department-based rates are used to price contracts,Northern motors will likely be unhappy. |
This is because their bills under the simple-costing system appear to have been underpriced. |
Using the department-based rates,their bills will be overpriced. |
If the new department-based rates are used,AP should explain to the unhappy customers how the calculation was done |
and point out their high use of cost drivers relative to other customers |
4 | B. | to reevaluate employee pay scales |
C. | to examine and streamline its own operations so that there is maximum value- added from all indirect resources | |
D. | to set targets over time to reduce both the consumption of each indirect resource and the unit costs of the resources | |
5 | D. | All of the above |
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3 of 5 (1 come core: 0 of 1 pt 15-21 (similar to) Question Help Automotive Products (AP) designs and produces automotive parts. In 2017, actual manufacturing overhead is $318,000. AP's simple costing system allocates manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so AP's controller Duncan Johnson realizes that it is time to examine the consumption of overhead...
Please answer the 5 requirements and label each part clearly and accordingly. Start by filling in the blanks below erhead resources: design, production Requirements prices, so CP's co alloca 1. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation ing the allocation base. machin d your an 2. Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates Comment on your answers in...