Wiley Company produces lawn mowers. The deluxe model has a sturdier frame, a higher horsepower engine, a
Question:
Wiley Company produces lawn mowers. The deluxe model has a sturdier frame, a higher horsepower engine, a wider blade and mulching capability. The following estimates were prepared at the beginning of the year:
Basic Model.................................... 20,000
Deluxe Model................................. 10,000
Total Expected quantity................ 30,000
Selling price $180 $360
Direct labor and direct materials costs $80 $165
Machine hours 6,000 4,000 10,000
Direct labor hours 20,000 10,000 30,000
Overhead costs for the year are predicted to be $600,000.Using direct labor hours as the base (cost driver) for total annual overhead
a. Calculate the predetermined overhead rate for the year
b. Estimate the product cost per unit for each model.
Using machine hours as the base (cost driver) for total annual overhead
a. Calculate the predetermined overhead rate for the year
b. Estimate the product cost per unit for each model. Assume that direct labor hours was the chosen cost driver. In January 2,000 basic models are built and sold and it takes 2,100 labor hours.
Actual cost of DM and DL in January is $165,000.
a. What is cost of goods sold for January?
b. Assume actual overhead costs in January are $800 more than the overhead charged (or applied) to the products built in January? What would cause a difference like that? What would a company do with that variance?
Project Management A Managerial Approach
ISBN: 978-0470226216
7th Edition
Authors: Jack R. Meredith, Samuel J. Mantel,