Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $40,000 2. Machine setups Number of setups 21,500 3. Quality inspections Number of inspections 33,000 $94,500 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 (a) Determine the overhead rate for each activity. Overhead Rate Materials handling $enter a dollar amount per requisition per requisition Machine setups $enter a dollar amount per setup per setup Quality inspections $enter a dollar amount per inspection per inspection
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $40,000 2. Machine setups Number of setups 21,500 3. Quality inspections Number of inspections 33,000 $94,500 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 (a) Determine the overhead rate for each activity. Overhead Rate Materials handling $enter a dollar amount per requisition per requisition Machine setups $enter a dollar amount per setup per setup Quality inspections $enter a dollar amount per inspection per inspection
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products
Section: Chapter Questions
Problem 2E: Precision Inc. manufactures wristwatches on an assembly line. The work in process inventory as of...
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Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
The cost driver volume for each product was as follows.
|
Activities
|
Cost Drivers
|
Total Cost
|
||||
|---|---|---|---|---|---|---|
| 1. |
Materials handling
|
Number of requisitions |
$40,000
|
|||
| 2. |
Machine setups
|
Number of setups |
21,500
|
|||
| 3. |
Quality inspections
|
Number of inspections |
33,000
|
|||
|
$94,500
|
The cost driver volume for each product was as follows.
|
Cost Drivers
|
Instruments
|
Gauges
|
Total
|
|||
|---|---|---|---|---|---|---|
|
Number of requisitions
|
400 | 600 | 1,000 | |||
|
Number of setups
|
200 | 300 | 500 | |||
|
Number of inspections
|
200 | 400 | 600 |
(a)
Determine the overhead rate for each activity.
|
Overhead Rate
|
|||
|---|---|---|---|
|
Materials handling
|
$enter a dollar amount per requisition
|
per requisition | |
|
Machine setups
|
$enter a dollar amount per setup
|
per setup | |
|
Quality inspections
|
$enter a dollar amount per inspection
|
per inspection |
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