Question
Waterway is an electronics components manufacturer. Information about the companys two products follows: AM-2 FM-9 Units produced 20,000 4,000 Direct labor hours required for production
Waterway is an electronics components manufacturer. Information about the company’s two products follows:
AM-2 | FM-9 | ||||
---|---|---|---|---|---|
Units produced | 20,000 | 4,000 | |||
Direct labor hours required for production | 10,000 | 15,000 | |||
Units per batch | 4,000 | 400 | |||
Shipping weight per unit | 0.50 | lbs. | 10 | lbs. |
The company incurs $814,000 in overhead per year and has traditionally applied overhead on the basis of direct labor hours.
(a)
Correct answer iconYour answer is correct.
(i) | How much overhead will be allocated to each product using the traditional direct labor hours allocation base? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.) |
AM-2 | FM-9 | ||
---|---|---|---|
Overhead allocated to each product | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places |
(ii) | What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.) |
AM-2 | FM-9 | ||
---|---|---|---|
Overhead cost per unit | $enter a dollar amount rounded to 2 decimal places | $enter a dollar amount rounded to 2 decimal places |
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(b)
Assume that Waterway has identified three activity cost pools.
Pool | Cost | Cost Driver | ||
---|---|---|---|---|
Assembly | $575,000 | Direct labor hours | ||
Setup | 39,000 | Number of setups (1 per batch) | ||
Packaging | 200,000 | Weight |
(i) | Given these activity pools and cost drivers, how much overhead should be allocated to each product? (Round per unit rates to 2 decimal places, e.g. 3.54 and final answers to 0 decimal places, e.g. 45,000.) |
AM-2 | FM-9 | |||
---|---|---|---|---|
Total allocated overhead | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places |
(ii) | What overhead cost per unit will be allocated to each product? (Round answers to 2 decimal places, e.g. 15.25.) |
AM-2 | FM-9 | |||
---|---|---|---|---|
Overhead cost per unit | $enter a dollar amount rounded to 2 decimal places | $enter a dollar amount rounded to 2 decimal places |
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A 1 Estimated overhead cost 814000 Total direct labour hours direct labour hoursof Am2 direct labour hours of fm9 10000 hours 15000 hours 25000 hours ...Get Instant Access to Expert-Tailored Solutions
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