Q1 Parts World (PW) designs and produces automotive parts. In 2020, actual variable manufacturing overhead is $316,000.
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Parts World (PW) designs and produces automotive parts. In 2020, actual variable manufacturing overhead is $316,000. PW's simple costing system allocates variable manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so PW's controller Dunbar Everett realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: (Click the icon to view the information.) Read the requirements. Requirement 1. Compute the manufacturing overhead allocated to each customer in 2020 using the simple costing system that uses machine-hours as the allocation base. Determine the formula needed to calculate overhead using the simple costing method and then calculate PW's manufacturing overhead rate for 2020. (Round your answer to the nearest cent.) Total manufacturing overhead Total machine hours Manufacturing overhead rate 4,000 316,000 = = $ 79.00 per machine hour Calculate the overhead allocated to each customer using the simple costing method. (Round your answers to the nearest whole dollar.) Machine Overhead Customer Hours Used Allocated Eastern Motors Hamlet Motors 300 $ 2,700 $ 23,700 213,300 Jerdon Auto 1,000 $ 79,000 Requirement 2. Compute the manufacturing overhead allocated to each customer in 2020 using department-based manufacturing overhead rates. (Abbreviations used: Dept. = Department.) Determine the formula used to calculate the department-based manufacturing overhead rates: Manufacturing overhead per dept. Total hours per dept. PW's 2020 manufacturing overhead rates by department are as follows: = Manufacturing overhead rate by dept. @ 8 Parts World (PW) designs and produces automotive parts. In 2020, actual variable manufacturing overhead is $316,000. PW's simple costing system allocates variable manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so PW's controller Dunbar Everett realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: (Click the icon to view the information.) Read the requirements. Requirement 1. Compute the manufacturing overhead allocated to each customer in 2020 using the simple costing system that uses machine-hours as the allocation base. Determine the formula needed to calculate overhead using the simple costing method and then calculate PW's manufacturing overhead rate for 2020. (Round your answer to the nearest cent.) Total manufacturing overhead Total machine hours Manufacturing overhead rate 4,000 316,000 = = $ 79.00 per machine hour Calculate the overhead allocated to each customer using the simple costing method. (Round your answers to the nearest whole dollar.) Machine Overhead Customer Hours Used Allocated Eastern Motors Hamlet Motors 300 $ 2,700 $ 23,700 213,300 Jerdon Auto 1,000 $ 79,000 Requirement 2. Compute the manufacturing overhead allocated to each customer in 2020 using department-based manufacturing overhead rates. (Abbreviations used: Dept. = Department.) Determine the formula used to calculate the department-based manufacturing overhead rates: Manufacturing overhead per dept. Total hours per dept. PW's 2020 manufacturing overhead rates by department are as follows: = Manufacturing overhead rate by dept. @ 8
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Horngrens Cost Accounting A Managerial Emphasis
ISBN: 9780135628478
17th Edition
Authors: Srikant M. Datar, Madhav V. Rajan
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