Develop Work Center OH rates based on budgeted '23 expenses. Three sets of OH rates should be developed, one using the prior year's actual hours, one using '23 budgeted hours, and one using practical capacity.

FACT SET

The company produces 12 items across 4 work centers. Individual items can only be produced in one work center.

The "Work Center Data" tab shows relevant data related to the items they produce, which work centers they are produced in, and the rates at which they are run.

The "Expense Data" tab shows selected expense accounts from the company's P&L.

The company runs all work centers 5 days per week, 50 weeks per year. They run two 8-hour shifts per day. When performing any analyses using practical capacity per work center, they estimate 80% uptime.

Direct Labor is incurred at the following split: WC 1 = 40%, WC 2 = 15%, WC 3 = 30%, WC 4 = 15%

The plant manager supports all 4 work centers evenly. Finance and their supplies also are considered to support all 4 work centers evenly.

Production Supplies are used in the work centers as follows: WC 1 = 30%, WC 2 = 25%, WC 3 = 35%, WC 4 = 10%

Equipment maintenance is spread based on the estimated machine hours for the year in each work center.

Fixed assets are assigned and tracked at the work center level. See the Other Data tab for further detail.

The company has one OH rate per work center, based on machine hours.

Rent is allocated based on square footage. See the Other Data tab for further detail.

Round all calculations to the nearest dollar, EXCEPT for the OH rates. Round those to the nearest 2 decimal places.

Work Center	Sq Ft		Asset #	Work Center	Acq Value	Years Prior	22 Depr	23 Depr
1	75,000		A1	1	200,000	6.5	14,286	0
2	60,000		A2	1	50,000	6.5	3,572	0
3	80,000		A3	1	125,000	6.5	8,929	0
4	105,000		A4	2	100,000	3.5	14,286	14,286
			A5	2	35,000	3.5	5,000	5,000
			A6	3	20,000	2.5	2,857	2,857
			A7	3	30,000	2.5	4,286	4,286
			A8	3	85,000	2.5	12,143	12,143
			A9	3	20,000	2.5	2,857	2,857
			A10	4	1,100,000	0.5	157,143	157,143
			A11	4	300,000	0.5	42,857	42,857
			A12	4	15,000	0.5	2,143	2,143
						Total Depr	270,359	243,572

Answer rating: 100% (QA)

Work Center OH Rates using prior years actual hours WC 1 2863 per hour WC ... View the full answer