Haillie Inc. manufactures two products: A123 and B456. Of the two product lines, the B456 product...
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Haillie Inc. manufactures two products: A123 and B456. Of the two product lines, the B456 product line is more complex, requiring one hour of direct labour time per unit to manufacture, compared to 0.5 hours of direct labour time for one unit of the A123. The B456 product line is produced on an automated production line. Currently, the company uses normal costing and allocates manufacturing overhead costs are to products on the basis of direct labour hours. The company estimates that manufacturing overhead will be $667,000 for 2023 and intends to produce 12,000 units of the A123 and 40,000 units of the B456. Estimated per- unit costs are as follows: Direct labour Direct materials A123 $18.00 $24.00 Required (A) Compute the predetermined manufacturing overhead rate. (8) Compute the amount of overhead the company expects to allocate to each product line. (C) Compute the total manufacturing cost for each product line. (D) Recently, the company's cost accountant has considered implementing an activity-based costing system. To help with this decision, the accountant gathered the following information: Quantity of cost driver A123 1400 600 Cost driver Number of setups Number of orders Machine hours Maintenance requests 400 8456 $36.00 $32.00 Activity Machine setups Purchase orders Machining Maintenance Compute the activity-based costing rates for each activity. 10,000 8456 2,000 400 22,000 600 Manufacturing overhead $306,000 $55,000 $256,000 $50,000 $667,000 Haillie Inc. manufactures two products: A123 and B456. Of the two product lines, the B456 product line is more complex, requiring one hour of direct labour time per unit to manufacture, compared to 0.5 hours of direct labour time for one unit of the A123. The B456 product line is produced on an automated production line. Currently, the company uses normal costing and allocates manufacturing overhead costs are to products on the basis of direct labour hours. The company estimates that manufacturing overhead will be $667,000 for 2023 and intends to produce 12,000 units of the A123 and 40,000 units of the B456. Estimated per- unit costs are as follows: Direct labour Direct materials A123 $18.00 $24.00 Required (A) Compute the predetermined manufacturing overhead rate. (8) Compute the amount of overhead the company expects to allocate to each product line. (C) Compute the total manufacturing cost for each product line. (D) Recently, the company's cost accountant has considered implementing an activity-based costing system. To help with this decision, the accountant gathered the following information: Quantity of cost driver A123 1400 600 Cost driver Number of setups Number of orders Machine hours Maintenance requests 400 8456 $36.00 $32.00 Activity Machine setups Purchase orders Machining Maintenance Compute the activity-based costing rates for each activity. 10,000 8456 2,000 400 22,000 600 Manufacturing overhead $306,000 $55,000 $256,000 $50,000 $667,000
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A To compute the predetermined manufacturing overhead rate we need to divide the estimated manufacturing overhead costs by the total estimated direct ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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