OVERHEAD COST ALLOCATION | |||||
Marion & Gaborik are production managers at the Marion Gaborik Pty Ltd trailer factory in High River, Alberta, Canada. | |||||
Both managers use predetermined overhead application rates to apply manufacturing overhead to their production. | |||||
To calculate their application rates Marion uses machine hours while Gaborik uses direct labour hours. | |||||
BUDGETED production and cost data for the two managers follows. | |||||
Marion | Gaborik | ||||
Manufacturing overhead | $241,500 | $231,500 | |||
Units | 9,500 | 7,500 | |||
Machine hours | 10,000 | 5,000 | |||
Material cost | $12,500 | $15,500 | |||
Direct labour hours | 9,500 | 7,000 | |||
Direct labour cost | $225,000 | $228,000 | |||
ACTUAL production and production information follows. | |||||
Marion | Gaborik | ||||
Manufacturing overhead | $225,000 | $232,000 | |||
Units | 8,000 | 9,500 | |||
Machine hours | 8,000 | 9,500 | |||
Material cost | $16,000 | $17,000 | |||
Direct labour hours | 8,500 | 8,500 | |||
Direct labour cost | $249,000 | $220,000 | |||
Compute Marion's predetermined overhead application rate. | |||||
Compute Marion's overhead applied. | |||||
Compute Marion's over (under) application of overhead. | |||||
Compute Marion's cost per unit of production. Use actual labour & material and applied overhead. |
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OVERHEAD COST ALLOCATION Marion & Gaborik are production managers at the Marion Gaborik Pty Ltd trailer...
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