ACCOUNTING

Exercise 17-6 Part 2

2. Determine the overhead cost assigned to each product line using the plantwide rate computed in part 1.(Round your intermediate calculations to 2 decimal places. Omit the “$” sign in your response.)

 

Product Overhead cost
  Part A27C  
  Part X82B  

 

 

3.

Exercise 17-7 Departmental overhead rates L.O. P2

Textra Polymers produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2011 follow.

 

  Molding Trimming
  Direct labor hours     52,000  DLH       48,000  DLH  
  Machine hours     30,500  MH       3,600  MH  
  Overhead costs   $ 730,000       $ 590,000    

 

Data for two special order parts to be manufactured by the company in 2011 follow:

 

  Part A27C Part X82B
  Number of units   9,800  units     54,500  units  
  Machine hours                
     Molding   5,100  MH     1,020  MH  
     Trimming   2,600  MH     650  MH  
  Direct labor hours                
     Molding   5,500  DLH     2,150  DLH  
     Trimming   700  DLH     3,500  DLH  

 

Required
1. Compute a departmental overhead rate for the molding department based on machine hours and a department overhead rate for the trimming department based on direct labor hours. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

 

Department Overhead rate
  Molding  
  Trimming  

 

2. Determine the total overhead cost assigned to each product line using the departmental overhead rates from requirement 1. (Round your intermediate calculations to 2 decimal places and final answers to whole dollar amount. Omit the “$” sign in your response.)

 

  Product Molding Trimming Total overhead
cost
  Part A27C      
  Part X82B      

 

3. Determine the overhead cost per unit for each product line using the departmental rate.. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

 

  Product Overhead cost
  Part A27C  
  Part X82B  

 

 

4.

Exercise 17-9 Using the plantwide Overhead rate to assess prices L.O. A1, P1

Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

 

Process Activity Overhead Cost Driver Quantity
  Components   Changeover   $ 500,000   Number of batches 800
    Machining     279,000   Machine hours 6,000
    Setups     225,000   Number of setups 120
     


     
      $ 1,004,000      
  Finishing   Welding   $ 180,300   Welding hours 3,000
    Inspecting     210,000   Number of inspections 700
    Rework     75,000   Rework orders 300
     


     
      $ 465,300      
  Support   Purchasing   $ 135,000   Purchase orders 450
    Providing space     32,000   Number of units 5,000
    Providing utilities     65,000   Number of units 5,000
     


     
      $ 232,000      
     




     

 

Additional production information concerning its two product lines follows.

 

  Model 145 Model 212
  Units produced   1,500     3,500  
  Welding hours   800     2,200  
  Batches   400     400  
  Number of inspections   400     300  
  Machine hours   1,800     4,200  
  Setups   60     60  
  Rework orders   160     140  
  Purchase orders   300     150  

 

Required
1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.)

 

  Product Overhead cost
  Model 145  
  Model 212  

 

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