Question

PLEASE PLEASE PLEASE HELP ME!

Several years after reengineering its production​ process, Zeke Corporation hired a new​ controller, Alice Brown. She developed an ABC system very similar to the one used by Zeke​'s chief rival. Part of the reason Brown developed the ABC system was because Zeke​'s profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC​ system, the company had used a plantwide overhead rate based on direct labor hours that was developed years ago.

For the upcoming​ year, Zeke​'s budgeted ABC manufacturing overhead allocation rates are as​ follows:

The number of parts is now a feasible allocation base because Kane recently installed a plantwide computer system. Kane produces two wheel​ models: Standard and Deluxe. Budgeted data for the upcoming year are as​ follows:

Requirement 1. Compute the total budgeted manufacturing overhead cost for the upcoming year.

Requirement 2. Compute the manufacturing overhead cost per wheel of each model using ABC. ​

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.)

Now use the plantwide overhead rate to determine the manufacturing overhead cost per wheel. ​

Data Table Activity Cost Allocation Rate 4.00 per part 375.00 per setup Activity Allocation Base Materials handling..Number of Machine setup . Number of setups Insertion of parts . Number of parts Finishing .. . . .. . S $ 28.00 per part Finishing direct labor hours 54.00 per hour Print Done Data Table Standard Deluxe 8.0 20.0 2.0 2.6 10.0 20.0 3.5 3.4 Parts per wheel. Setups per 1,000 wheels Finishing direct labor hours per wheel Total direct labor hours per wheel The company's managers expect to produce 1,000 units of each model during the year Print Done Requirement 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Enter th Kane Corporation Total Budgeted Indirect Manufacturing Costs Budgeted Quantity of Activity CostTotal Budgeted Activity Cost Allocation Base Allocation Rate Indirect Cost Materials handling Machine setups Insertion of parts Finishing Total budgeted indirect cost

Answer 1

1.

Kane Corporation
Total Budgeted Indirect Manufacturing Costs
Activity	Budgeted Quantity of Cost Allocation Base	Activity Cost Allocation Rate	Total Budgeted Indirect Cost
Materials Handling*	( 8 + 10 ) * 1000= 18,000	$4 per part	$72,000
Machine Setups**	20 + 20 = 40	$375 per setup	$15,000
Insertion of Parts***	( 8 + 10 ) * 1000 = 18,000	$28 per part	$504,000
Finishing****	( 2.0 + 3.5 ) * 1000 = 5,500	$54 per hour	$297,000
Total Budgeted Indirect Costs			$888,000

Materials Handling* - As the parts per wheel of Standard and Deluxe were 8 and 10 respectively, therefore, to arrive at the total overhead costs for 1,000 wheels, the total parts were multiplied by 1,000.

Machine Setups** - As the number of setups were given for 1000 wheels, therefore, no adjustment is required.

Insertion of Parts*** - As the direct labor hours utilized for insertion of parts was given per wheel, therefore, it has been multiplied by 1,000 to get the total overhead cost.

Finishing**** - Direct Labor hours utilized for finishing was given per wheel, therefore multiplied by 1000 to get the cost of 1000 wheels.

2.

S.No.	Particulars	Model
		Standard	Deluxe
a.	Parts per wheel	8	10
b.	Material Handling Cost rate per part	$4	$4
c.	Material Handling Cost (a*b)	$32	$40
d.	Material Handling Cost for 1000 wheel (c*1000)	$32,000	$40,000
e.	Setups per 1000 wheels	20	20
f.	Machine Setup Cost rate per setup	$375	$375
g.	Machine Setup Cost (e*f)	$7500	$7500
h.	Insertion of Parts Cost per part	$28	$28
i.	Insertion of Parts Cost per wheel (h*a)	$224	$280
j.	Insertion of Parts Cost for 1000 wheels (i*1000)	$224,000	$280,000
k.	Finishing Direct Labor Hours per wheel	2	3.5
l.	Finishing Direct Labor Cost per hour	$54	$54
m.	Finishing Direct Labor Cost per wheel (k*l)	$108	$189
n.	Finishing Direct Labor Cost for 1000 wheels (m*1000)	$108,000	$189,000
o.	Total Manufacturing Cost for 1000 wheels (d+ g+ j + n )	$371,500	$516,500
p.	Manufacturing Overhead Cost per Wheel (o / 1000)	$371.50	$516.50

3. Plant-wide overhead rate based on Direct Labor Hours.

Total Direct Labor Hours = ( Total Direct Labor Hours per wheel of Standard + Total Direct Labor Hours per wheel of Deluxe )*1000

= ( 2.6 + 3.4 ) *1000

= 6,000 labor hours.

Total Manufacturing Overhead Costs = $888,000 (as calculated in 1 above)

Manufacturing Overhead Cost per hour = Total Manufacturing Overhead Costs / Total Direct Labor Hours

= $888,000 / 6,000 hours

= $148 per hour.

Manufacturing Overhead Cost per wheel of Standard = Total Direct Labor Hours per wheel of Standard * Manufacturing Overhead Cost per hour

= 2.6 * $148

= $384.80 per wheel.

Manufacturing Overhead Cost per wheel of Deluxe = Total Direct Labor Hours per wheel of Deluxe * Manufacturing Overhead Cost per hour

= 3.4 * $148

= $503.20 per wheel.