Bombay Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow:
Seasonal | All-Purpose | Totals | |||||||
Number of rugs | 2,400 | 5,600 | 8,000 | ||||||
Number of direct labor hours | 120,000 | 168,000 | 288,000 | ||||||
Required
Assume that annual overhead costs total $172,800. Select the appropriate cost driver and determine the amount of overhead to allocate to each type of rug.
Bombay automates the seasonal rug line, which results in a dramatic decline in labor usage and allows the company to make 2,400 rugs in only 12,000 hours. Bombay continues to make the all-purpose rugs the same way as before. The number of rugs made and the labor hours required to make them after automation follow:
Seasonal | All-Purpose | Totals | |||||||
Number of rugs | 2,400 | 5,600 | 8,000 | ||||||
Number of direct labor hours | 12,000 | 168,000 | 180,000 | ||||||
Overhead costs are expected to increase to $216,000 as a result of the automation. Allocate the increased overhead cost to the two types of rugs using direct labor hours as the allocation base.
Bombay Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are...
Baird Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow: Number of rugs Number of direct labor hours Seasonal 1,260 121,000 All-Purpose 2.880 167,000 Totals 4,140 288,000 Required a. Assume that annual overhead costs total $60,480. Select the appropriate cost driver and...
Rundle Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow: Number of rugs Number of direct labor hours Seasonal 1,240 116,000 All-Purpose 2,800 168,000 Totals 4,040 284,000 Required a. Assume that annual overhead costs total $62,480. Select the appropriate cost driver and...
Finch Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow: Number of rugs Number of direct labor hours Seasonal 1,170 122,000 All-Purpose 2,760 165,000 Totals 3,930 287,000 Required a. Assume that annual overhead costs total $74,620. Select the appropriate cost driver and...
Xin Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 40 skeins of wool at a cost of $5 per skein and 0.75 gallons of dye at a cost of $8 per gallon. All other materials are indirect. At the beginning of the year Xin has an inventory of 452,000 skeins of wool at a cost of $949,200 and 3,600 gallons of dye at a cost of $22,320. Target ending inventory...
14. Kleinfeldt Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $4,000 to two different jobs as follows: Job 1: (10 hours)- $2,000 Job 2: (10 hours) $2,000 The production process for Job 1 is automated. Now Job 1 requires only 2 hours of direct labor but four hours of mechanical processing. As a result, total overhead increased to $6,000. How much overhead cost will be assigned to Job 2 after automation? A) $3,000...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 18,000 12,000 765 935 57 133 Total estimated overhead...
Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows: Activity Pools Cost Pool Total Cost Driver Repair and maintenance on assembly machine $ 104,000 Number of units produced Programming cost 168,000 Number of programming hours Software inspections 12,000 Number of...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case 18,000 660 63 Leather Case 7,000 990 117 Total estimated overhead costs...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow. Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 15,000 10,000 570 60 930 90 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Fabric Case Leather Case Number of labor hours 14,000 6,000 Number of material moves 504 696 Number of setups 27 63 Total estimated overhead...