Fyfe Co. manufactures plastic novelties used for advertising purposes. The process involves three steps. In the moulding department, hot plastic is injected into a mould, cooled and then ejected. This creates the basic product. The products are then moved to the trimming department, where excess plastic (flash) is trimmed off and the product is inspected for faults. Any products found to be defective are recycled. The products are then moved to the painting department, where they are painted with the customer's message and logo.

 
The following information was reported for the most recent period:

 a) Compute the manufacturing overhead rate, assuming Fyfe uses a normal plant-wide rate based on planned manufacturing overhead and average direct labour hours.
 
b) Compute the manufacturing overheard rate, assuming Fyfe uses an actual plant-wide rate based on direct labour hours.


c) Compute the departmental manufacturing overhead rates, assuming Fyfe uses normal department rates based on planned manufacturing overhead and the average level of the cost driver activity. Fyfe plans to use machine hours as the cost driver in the moulding department and direct labour hours as the cost driver in the trimming and painting departments.

d) Compute the manufacturing overhead rate, assuming Fyfe uses actual department rates. Fyfe plans to use machine hours as the cost driver in the moulding department and direct labour hours as the cost driver in the trimming and painting departments.

Transcribed Image Text:

Department Planned manufacturing overhead Actual manufacturing overhead Average machine hours Actual machine hours Average direct labour hours Actual direct labour hours Moulding $1,656,000 $1,687,000 12,000 12,750 5,400 5,500 Trimming $645,000 $664,000 2,100 2,250 8,750 9,200 Painting $854,000 $822,000 4,500 4,100 9,000 8,700 Department Planned manufacturing overhead Actual manufacturing overhead Average machine hours Actual machine hours Average direct labour hours Actual direct labour hours Moulding $1,656,000 $1,687,000 12,000 12,750 5,400 5,500 Trimming $645,000 $664,000 2,100 2,250 8,750 9,200 Painting $854,000 $822,000 4,500 4,100 9,000 8,700

Answer rating: 100% (QA)

a To compute the manufacturing overhead rate using a normal plantwide rate based on planned manufacturing overhead and average direct labour hours we ... View the full answer