A. Calculate total cost and the average cost per unit if the overhead is based on the
Fantastic news! We've Found the answer you've been seeking!
Question:
A. Calculate total cost and the average cost per unit if the overhead is based on the direct labor cost. Show information as Job cost sheet.
B. Which overhead cost allocation method would you recommend to the controller?
Transcribed Image Text:
Larabee Company produces two types of product, flat and round, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (250 % of direct labor cost) Total cost Units produced Average cost per unit Overhead Cost Category (Activity Cost Pool) Flat $12,000 6,000 15.000 $33,000 Supervision Depreciation of machinery Assembly line preparation 10,000 $3.30 Round Driver Direct labor cost ($) Machine hours Setups (number) $24,000 18,000 45.000 $87,000 Larabee s controller wishes to apply activity-based costing (ABC) to allocate the $60,000 of overhead costs incurred by the two product lines to see whether cost per unit would change markedly from that reported above. She has collected the following information. 15,000 $5.80 Total $36.000 24,000 60,000 $120,000 Flat Usage Round $6.000 $18,000 400 hours 500 hours 40 times 80 times Total $24,000 900 hours 120 times tatalo sie raubing orb ganovilab bus grillse gnnote miw botsiooses 21200 VILÁ Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation She has collected the following information about the cost driver for each category (cost pool) and the amount of each driver used by the two product lines. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Instructions Driver Direct labor cost ($) Machine hours Setups (number) Flat Cost $12,600 30,600 16,800 $6,000 400 hours 40 times Usage Round $18,000 500 hours 80 times Total $24,000 900 hours 120 times Larabee Company produces two types of product, flat and round, on the same production line. For the current period, the company reports the following data. Direct materials Direct labor Overhead (250 % of direct labor cost) Total cost Units produced Average cost per unit Overhead Cost Category (Activity Cost Pool) Flat $12,000 6,000 15.000 $33,000 Supervision Depreciation of machinery Assembly line preparation 10,000 $3.30 Round Driver Direct labor cost ($) Machine hours Setups (number) $24,000 18,000 45.000 $87,000 Larabee s controller wishes to apply activity-based costing (ABC) to allocate the $60,000 of overhead costs incurred by the two product lines to see whether cost per unit would change markedly from that reported above. She has collected the following information. 15,000 $5.80 Total $36.000 24,000 60,000 $120,000 Flat Usage Round $6.000 $18,000 400 hours 500 hours 40 times 80 times Total $24,000 900 hours 120 times tatalo sie raubing orb ganovilab bus grillse gnnote miw botsiooses 21200 VILÁ Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation She has collected the following information about the cost driver for each category (cost pool) and the amount of each driver used by the two product lines. Overhead Cost Category (Activity Cost Pool) Supervision Depreciation of machinery Assembly line preparation Instructions Driver Direct labor cost ($) Machine hours Setups (number) Flat Cost $12,600 30,600 16,800 $6,000 400 hours 40 times Usage Round $18,000 500 hours 80 times Total $24,000 900 hours 120 times
Expert Answer:
Answer rating: 100% (QA)
The total costs and the average cost of each product under the Traditional Allocation method ie on t... View the full answer
Related Book For
Horngrens Accounting
ISBN: 978-0134674681
12th edition
Authors: Tracie L. Miller nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these accounting questions
-
Which competitive pay policy would you recommend to an employer? Why? Does it depend on circumstances faced by the employer? Which ones?
-
If both marginal cost and the average variable cost curves are U-shaped, at the point of minimum average variable cost the marginal cost must select one: a. less than the average variable cost...
-
A static overhead budget based on 40,000 direct labor hours shows Factory Insurance $6,500 as a fixed cost. At the 50,000 direct labor hours worked in March, factory insurance costs were $6,200. Is...
-
Three employees of the Horizon Distributing Company will receive annual pension payments from the company when they retire. The employees will receive their annual payments for as long as they live....
-
At the beginning of 2014, Krypton Inc. reporting a deferred tax liability of $80,000. At the end of 2014, the related cumulative temporary difference amounts to $300,000 and it will reverse evenly...
-
For the following independent situations, use professional judgement to determine when the company should recognize revenue from the transactions: (a) WestJet Airlines sells you a nonrefundable...
-
Identify the grounds for a demurrer.
-
Time Value of Money Concept The following situations involve the application of the time value of money concept: 1. Janelle Carter deposited $9,750 in the bank on January 1, 1993, at an interest rate...
-
Sales Cost of goods sold Accounts receivable 2021 $ 553,188 273,512 26,830 2020 $ 359,213 177,614 20,978 2019 $ 287,370 144,011 19,599 2018 $ 197,505 97,827 11,534 2017 $ 148,500 72,765 10,143...
-
As a business owner, I have 3 different locations within the Denver Metro area. Two of those places are retail sales operations with about 3,500 square feet in each retail location. The third...
-
We wish to sell prefabricated fixed height seats for Indian males. Provide the measurements for the popliteal height of Indian males that will allow the company to fit down the 5th percentile. (in...
-
Required rate of return is 12%, what level of annual cash savings? Grouper's Lawn Service needs to purchase a new lawnmower costing $8,696 to replace an old lawnmower that cannot be repaired. The new...
-
Using circular motion to approximate elliptical orbits, how can you describe the motion of planets, moons (natural satellites) and satellites (artificial satellites) using mathematical...
-
A sample of gas is compressed by a piston. (See the figure below.) Gas The piston does 450 J of work on the gas. At the same time, the gas absorbs 130 J of heat from the surroundings. What is the...
-
An astronaut with a mass of 8 5 kg is outside a space capsule when the tether line breaks. To return to the capsule, the astronaut throws a 2 . 0 kg wrench away from the capsule at a speed of 1 4 m /...
-
4. Write E20 assembly instructions as described. When directed to write "a pair" of instructions, you should write two instructions that, when executed in sequence, will have the described effect....
-
A particle is projected from ground with an angle with the horizontal, the x-component of its initial velocity is 50 m/s and it reaches its maximum height in 3 second. The range covered by the...
-
Which one of the following anhydrous chloride is not obtained on direct heating of its hydrated chloride? (A) BaCl2 (B) CaClz (C) MgCl2 (D) SrCl2
-
Describe the three groups of units that must be accounted for when using the FIFO method.
-
What is an accrued revenue? Provide an example.
-
The 2018 comparative balance sheet and income statement of Appleton Group, Inc. follow. Appleton disposed of a plant asset at book value during 2018. Prepare the spreadsheet for the 2018 statement of...
-
Riverside Corporation began 2020 owing noles payable of \(\$ 3.5\) million. During 2020. Riverside borrowed \(\$ 1.7\) million on notes payable and paid off \(\$ 1.6\) million of notes payable from...
-
In this chapter we showed in Figure 11.1 a purchases substantive audit programme, but we did not include the use of audit software. Suggest how audit software could have been used in programme steps...
-
Consider the following statements and explain why they may be true or false: (a) Tests of controls are tests designed to check the accounting and control systems are effective. (b) Substantive tests...
Study smarter with the SolutionInn App