Question

Several years after reengineering its production process, King Corporation hired a new controller, Rachael Johnson. (Click the icon to view additional information.) The number of parts is now a feasible allocation base because King recently installed a plantwide computer system. King produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as follows: (Click the icon to view the additional data.) For the upcoming year, King's budgeted ABC manufacturing overhead allocation rates 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.) King Corporation x Data Table - X Data Table Х i Requirements Standard Deluxe 6.0 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. 2. Compute the manufacturing overhead cost per wheel of each model using ABC. 3. Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. Parts per wheel 4.0 Setups per 1,000 wheels 20.0 20.0 Finishing direct labor hours per wheel 1.0 3.0 Total direct labor hours per wheel......... 2.7 3.8 The company's managers expect to produce 1,000 units of each model during the year. Activity Cost Activity Allocation Base Allocation Rate Materials handling .... Number of parts $ 4.50 per part Machine setup Number of setups $ 325.00 per setup Insertion of parts Number of parts $ 31.00 per part Finishing Finishing direct labor hours $ 51.00 per hour Print Done Print Done Print Done

Answer 1

		A	B	A*B
Part 1	Activity (Standard plus Delux)	Budgeted Qty of Allocation Base	Allocation Rate per activity	Total Budgeted Overheads
	Material Handling (4*1000,6*1000)	10,000.00	4.50	45,000.00
	Machine Setup (20+20)	40.00	325.00	13,000.00
	Insertion of parts (4*1000,6*1000)	10,000.00	31.00	310,000.00
	Finishing (1*1000,3*1000)	4,000.00	51.00	204,000.00
	Total Manufacturing Overhead Cost			572,000.00
			Quantity of Cost Allocation	Total Allocated Activity Cost ( Allocation rate* Quantity of cost allocation
Part 2	Activity (Standard plus Delux)	Allocation Rate per activity	Standard	Delux	Standard	Delux
	Material Handling	4.50	4,000.00	6,000.00	18,000.00	27,000.00
	Machine Setup	325.00	20.00	20.00	6,500.00	6,500.00
	Insertion of parts	31.00	4,000.00	6,000.00	124,000.00	186,000.00
	Finishing	51.00	1,000.00	3,000.00	51,000.00	153,000.00
	Total Manufacturing Overhead Cost				199,500.00	372,500.00
	Divide By No of Wheels				1,000.00	1,000.00
	Allocated Maufacturing overhead cost per wheel				199.50	372.50
Part3	Total Manuafcturing Overheads	572,000.00
	Divided by Direct labours (2.7*1000+ 3.8*1000)	6,500.00
	Predetermined Rate	88.00
		Standard	Delux
	No of Direct Labour Hours	2,700.00	3,800.00
	PrederermiedRate per hour	88.00	88.00
	Manufacturing Overhead Cost	237,600.00	334,400.00
	Divided By No of wheels	1,000.00	1,000.00
	Allocated Maufacturing overhead cost per wheel	237.60	334.40