Using DLH-One Cost Pool Let's try the same problem, except we will allocate OH based on one driver like we did in Chapter 3. All overhead will be allocated based on Direct Labor Hours: Solve the following: Total Overhead - Cost Per Unit Total Driver Allocated to DVD: Answer-make sure you show all your work Allocated to CD: Answer-make sure you show all your work What are we seeing? Answer-make sure you explain your answer thoroughly: That Try it again. Go back to the example on page 4, and calculate OH allocation based on one cost pool using DL hours as the driver: Solve the following: Total Overhead = Total Driver Allocated to DVD: Answer-make sure you show all your work Allocated to CD: Answer-make sure you show all your work What are we seeing? Answer - make sure you explain your answer thoroughly: Chapter 5 Lecture - Page 7 Let's try it together with different numbers Activity Cost Pool Labor related Machine related Machine setups Product testing Total Overhead Activity Allocation Base (Cost Driver) Labor hours machine hours # of setups of tests Estimated Overhead Cost $500,000 1,000,000 900,000 1,200,000 $3,600,000 Expected Activity Total 250,000 400,000 3,000 10,000 DVD Units 50,000 120,000 2,000 8,000 CD Units 200,000 280,000 1,000 2,000 Please fill in all the blanks below using the information from above: (Don't forget to use the example from the previous page as a reference.) Cost Activity Pool Labor related Cost Driver 250,000 = Activity Rate $2.00 per labor hour 500,000 Machine related 1,000,000/ 400,000 $2.50 per machine hour Machine setups 900,000/ 3,000 - $300.00 per setup Product testing 1,200,000/ 10,000 - $120.00 per test Allocate OH to each product - assuming actual = expected. DVD Units Expected Activity Allocated Cost Activity Rate CD Units Expected Activity Allocated Cost Activity Pool $400,000 $700,000 Labor related Machine related Machine setups Product testing $2.00 50,000 $2.50 120,000 $300.00 2,000 $120.00 8,000 $100,000 200,000 $300,000 280,000 $600,000 1,000 $960,000 2,000 $1,960,000 $300,000 $240,000 $1,640,000 Total Chapter 5 Lecture - Page 6