Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most...
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Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $330,400. During that time, the company produced 13,900 units of the M-008 and 2,700 units of the M-123. The direct costs of production were as follows. M-008 Direct materials. $111,200 Direct labor M-123 $108,000 111, 200 54,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total $219, 200 165,200 Costs $151,400 80,000 99,000 $330,400 Activity Level M-008 M-123 8,000 2,000 20 30 20 20 Total 10,000 40 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product? Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $330,400. During that time, the company produced 13,900 units of the M-008 and 2,700 units of the M-123. The direct costs of production were as follows. M-008 Direct materials. $111,200 Direct labor M-123 $108,000 111, 200 54,000 Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last year were as follows. Cost Driver Number of machine-hours Number of production runs Number of inspections Total overhead Total $219, 200 165,200 Costs $151,400 80,000 99,000 $330,400 Activity Level M-008 M-123 8,000 2,000 20 30 20 20 Total 10,000 40 50 Required: a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per unit produced for product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost per unit produced for each product?
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Answer rating: 100% (QA)
Calculate the overhead rate for each cost driver Overhead Rate for Number of MachineHours Total Overhead Total MachineHours 330400 10000 3304 per mach... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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