To get started, you’ll need the workbook DB 6-1. Using the overhead driver “Material Dollars,” you are to develop an overhead rate using this driver, and then apply it to the individual units made. There are two steps in this process:

Develop the rate. To develop the overhead rate, the calculation is:

This calculation tells us the amount of overhead we will charge to the product for every dollar of materials it uses. It does not eliminate the need to charge material cost—it is the overhead per dollar of material—a separate charge. You do this calculation on the worksheet DB 6.1 O-H Mat’l $ Template using information from the worksheet Product Cost Summaries—20x6.

Apply the rate to a unit made. 

You will now calculate the overhead cost for the various units made at Kinkaid using the rate you just developed and then for the company in total. There are four worksheets in the DB 6.1 workbook for this part of the exercise: DB 6.1 KitcCr-OH Mat $ Template, DB 6.1 CustCr-OH Mat $ Template, DB 6.1 KitcCr-OH Mat $ Ttl Tmpl, and DB 6.1 CustCr-OH Mat $ Ttl Tmpl. You will use two worksheets for these calculations: your solution to Part 1 above (the material dollar overhead rate) and the Product Cost Summaries—20x6 worksheet.

REQUIRED:

Turn in your completed product costing worksheets to your instructor along with the answer to the following questions: Which products are the most profitable? Least profitable?

Transcribed Image Text:

Total Overhead Cost Total Material Dollars