GoldenValley Company has been allocating overhead to individual product lines based on each line's relative shares...

  

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GoldenValley Company has been allocating overhead to individual product lines based on each line's relative shares of direct labor hours. For the upcoming year, the company estimated that manufacturing overhead will be $1,745,540 and estimated direct labor hours will be 109,300. The company also has the following estimates: Total Amount of Activity Cost Driver Direct labor hours Number of setups Total Amount $633,940 Cost Pool Maintenance costs Setup costs Engineering costs 109,300 534,000 Number of design changes 200 380 577,600 $1,745,540 Among many other products, Golden Valley has two switches, Standard and Elite switches. Standard switches are a high-volume product that the company makes in large batches, while Elite switches are a specialty product that is fairly low in sales volume. Information about Standard and Elite usage of the different activities follows: Standard Elite 280 Direct labor hours. 2,760 Number of setups 1 14 Number of design changes 2 18 Calculate the predetermined overhead rate based on direct labor hours (traditional allocation). (Round answer to 2 decimal places, e.g. 15.25.) Predetermined overhead rate per DLH $ Use this predetermined overhead rate to calculate the amount of overhead to apply to Standard and Elite switches, based on their usage of direct labor hours. (Round answers to 0 decimal places, e.g. 125.) Elite Standard Overhead allocated $ LINK TO TEXT LINK TO TEXT Calculate the individual ABC pool rates by taking the total amount of overhead for each cost pool and dividing that total by the total amount of activity for that pool. (Round maintenance costs pool rate to 2 decimal places, e.g. 15.25 and other answers to 0 decimal places, e.g. 125.) Cost Pool Cost pool rate Maintenance costs. /DLH $ Setup costs /setup $ Engineering costs /design change $ Allocate overhead to each of the two products using these three activity rates. (Round answers to 0 decimal places, e.g. 125.) Maintenance Costs Setup Costs Engineering Total MOH Standard $ Elite $ LINK TO TEXT LINK TO TEXT Compare the overhead calculated in part a to that calculated in part b. Which allocation method (traditional or ABC) most likely results a better estimate of product cost? Click if you would like to Show Work for this question: Open Show Work GoldenValley Company has been allocating overhead to individual product lines based on each line's relative shares of direct labor hours. For the upcoming year, the company estimated that manufacturing overhead will be $1,745,540 and estimated direct labor hours will be 109,300. The company also has the following estimates: Total Amount of Activity Cost Driver Direct labor hours Number of setups Total Amount $633,940 Cost Pool Maintenance costs Setup costs Engineering costs 109,300 534,000 Number of design changes 200 380 577,600 $1,745,540 Among many other products, Golden Valley has two switches, Standard and Elite switches. Standard switches are a high-volume product that the company makes in large batches, while Elite switches are a specialty product that is fairly low in sales volume. Information about Standard and Elite usage of the different activities follows: Standard Elite 280 Direct labor hours. 2,760 Number of setups 1 14 Number of design changes 2 18 Calculate the predetermined overhead rate based on direct labor hours (traditional allocation). (Round answer to 2 decimal places, e.g. 15.25.) Predetermined overhead rate per DLH $ Use this predetermined overhead rate to calculate the amount of overhead to apply to Standard and Elite switches, based on their usage of direct labor hours. (Round answers to 0 decimal places, e.g. 125.) Elite Standard Overhead allocated $ LINK TO TEXT LINK TO TEXT Calculate the individual ABC pool rates by taking the total amount of overhead for each cost pool and dividing that total by the total amount of activity for that pool. (Round maintenance costs pool rate to 2 decimal places, e.g. 15.25 and other answers to 0 decimal places, e.g. 125.) Cost Pool Cost pool rate Maintenance costs. /DLH $ Setup costs /setup $ Engineering costs /design change $ Allocate overhead to each of the two products using these three activity rates. (Round answers to 0 decimal places, e.g. 125.) Maintenance Costs Setup Costs Engineering Total MOH Standard $ Elite $ LINK TO TEXT LINK TO TEXT Compare the overhead calculated in part a to that calculated in part b. Which allocation method (traditional or ABC) most likely results a better estimate of product cost? Click if you would like to Show Work for this question: Open Show Work

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Single pre determined overhead rate uses a single cost driver to allocate common costs among its pro... View the full answer