The emphasis in this exercise is on first assigning overhead to departments with different drivers, and then looking at the impact of using direct labor hours at the departmental level as the overhead driver. There are four worksheets that you will need to complete for this exercise: DB 6.2 Overhead Rate Template, DB 6.2 OH to Part- DLH Template, DB 6.2 KitcCr-OH Dept DLH Templ,  and DB 6.2 CustCr-OHK Dept DLH Templ. You will also see that there are three worksheets with data that will be useful: Product Cost Summaries- 20x6, Mfg CC An’ls for 20x6, and Labor and Line Hour Data 20x6. The steps you will follow are:

DB 6.2 Overhead Rate Template: 

Begin by entering the total overhead for the company using the Product Summaries-20x6 worksheet in cell B3. Next, fill in cells B6 to D6 with the data from the Labor and Line Hour Data 20x6 worksheet and then calculate the overhead rate by driver (for example, B3/ B6 for direct labor hours). Now, fill in rows 12 to 15 using the information from the Labor and Line Hour Data 20x6 worksheet. Next, calculate the amount of overhead charged to each department for rows 18 to 20 using the three different overhead rates and the driver quantity by department. Finally, given your results, answer the following question: Does the driver chosen impact how much overhead is charged to a department?

DB 6.2 OH to Part-DLH Template:

Here you are going to determine how much overhead would be charged to a part, by department, first using the plant-wide DLH rate and then developing and using rates that charge the actual overhead costs by department to the parts made in that department. For each column, you will complete the calculation for rows 5 to 13. Using your results, answer the following question: Does the driver chosen impact how much overhead is charged to individual parts?

DB 6.2 KitcCr-OH Dept DLH Templ:

Here you are going to calculate the overhead per unit using your departmental overhead cost per part using direct labor hours from Part 2. Begin by entering the cost per part, by department, from the DB 6.2 OH to Part-DLH Template in column D, rows 4-12. Next, enter the selling price, materials, and labor cost per unit using the Product Cost Summaries-20x6 data worksheet. Complete the rest of the calculations and then answer the following question: Which products appear to be the most profitable?

DB 6.2 CustCr-OH Dept DLH Templ:

You will repeat the commands that were used in part 3 for the Kitchen Craft line for the Custom Craft product line. When you are done, answer the following question: Which products appear to be the most profitable?

REQUIRED:

Turn in your completed product costing worksheets and your answers to the four questions in parts 1 through 4 in to your instructor.