Bass Accounting Services expects its accountants to work a total of 28,000 direct labor hours per year. The company's estimated total indirect costs are $336,000. The company uses direct labor hours as the allocation base for indirect costs. What is the indirect cost allocation rate?

Bass Accounting Services expects its accountants to work a total of 28,000 direct labor hours per year. The company's estimated total indirect costs are $336,000. The company uses direct labor hours as the allocation base for indirect costs. What is the indirect cost allocation rate?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1PA: Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the...

See similar textbooks

Related questions

Q: Jabari Manufacturing, a widgets manufacturing company, divides its production operations into three…

A: Cost per unit is calculated by dividing the total cost by the number of units produced.

Q: Colonels uses a traditional cost system and estimates next year's overhead will be $882,000, with…

A: Predetermined overhead rate = Total Overhead costs / Direct labor hours Predetermined overhead rate…

Q: If Chance Consulting wants to earn a profit that equals 35% of the job’s cost, how much should the…

A: Computation of labour rate is given by the following fomula Labour rate = Direct labour cost /…

Q: Salley Corporation produces a single product.Last year, the company had net operating income of…

A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…

Q: AAA Company is preparing its annual profit plan. As part of its analysis of the profitability of…

A: Activity based costing means where the product is valued on the basis of actual direct material ,…

Q: Margot Inc. produces thousands of gutters each year and uses the weighted-average method to allocate…

A: Under the weighted average method, the beginning WIP is not taken into consideration while…

Q: Moss Ltd. has the following activities: creating bills of materials (BOM), studying manufacturing…

A: In the context of the question, we are required to compute the cost assigned to the training…

Q: Midas Industries manufactures 20,000 components per year. The manufacturing cost of components was…

A: The fixed manufacturing overhead remains constant irrespective of units produced during the period.

Q: Ibrahim Corporation has the following estimated costs for the year: Direct Materials…

A: Pre-Determined Overhead Rate: Manufacturing overheads are those costs that are incurred indirectly…

Q: Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct…

A: Total manufacturing overhead cost: This cost means that all cost which is related to the goods…

Q: Underwood, Inc. manufactures two products. It currently has 5,600 hours of direct labor and 800…

A: Given, Contribution margin per unit for Product B = $15.00 Machine hour per unit for product B =…

Q: Rose Company has a relevant range of production between 9,000 and 25,000 units. The following cost…

Q: Assume a company incurs $196,000 of customer service salaries. The employees in the Customer service…

A: please give a like your response matters Customer service salaries allocated to " New Account Setup…

Q: Before the start of the year a company estimated the following costs: $540,000 for factory overhead,…

A: $6.00

Q: How many calendars must Paney sell next year to earn an operating income of $24,600?

Q: R Ltd has been asked to quote for a job. The company aims to make a profit margin of 20% on sales.…

A: We have the following information: Desired Profit: 20% on sales Estimated total variable production…

Q: Bush Manufacturing has 31,000 labor hours available for producing M and N. Consider the following…

A: The maximum labor hours available are 31000 labor hours, and the contribution per labor hours of…

Q: Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are…

A: Activity-based costing is a method of costing that identifies activities in business that incurs…

Q: AAA Company is preparing its annual profit plan. As part of its analysis of the profitability of…

A: Cost Allocation on Traditional Basis: Under the Traditional Basis of Overhead Cost allocation, a…

Q: Vision Company is preparing its annual profit plan. As part of its analysis of the profitability of…

A: Overheads are the expenses incurred during the production process and they are not directly related…

Q: what is the total job cost?

A: Direct labor hours per year = 26000 hours Total indirect cost = $227,000 Direct labor rate = $65…

Q: A company estimates its manufacturing overhead will be $1,080,000 for the next year. What is the…

A: Activity based costing with the help of cost drivers, allocates overheads to cost pools before…

Q: Rose Company has a relevant range of production between 9,000 and 25,000 units. The following cost…

A: Formula: Total manufacturing overhead = Variable manufacturing overhead + Fixed manufacturing…

Q: Pinnacle Inc. manufactures curtains to client specifications, It has two cost categories that are…

A: Pinnacle Inc Predetermined Overhead rate = ($144261+134360+135978) / 250000 = 165.84% of Direct…

Q: arr Company provides human resource consulting services to small- and medium-sized companies. Last…

A: Two type of costs are being incurred in business, one is fixed costs and other is variable costs.…

Q: A team of workers makes 400 units of a product, which is sold in the market for $15 each. The…

A: Multifactor productivity= OutputLAbor+Materials+Overhead

Q: Determine the direct labor cost budget for one year. 2. Determine the number of units a laborer can…

A: Given in the question: Number of employees 30 Number of working days in a month 26…

Q: Using ABM in a service company Haworth Company is a management consulting firm. The company expects…

A: Computation of total cost of the consulting job: Particulars Amount Direct labor costs…

Q: A company estimates that it has $400,000 in variable overhead costs annually and $265,000 in fixed…

A: Here in this question, we are required to calculate the predetermine overhead rate. Predetermine…

Q: Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000…

A: Absorption Costing: This method of cost calculation considers both the direct as well as indirect…

Q: A business operated at 100% of capacity during its first month, with the following results: Sales…

Q: Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 5,500…

A: Under Absorption costing, total costs either they are fixed or variable these are considered for…

Q: how can resolve this? During the month of May, direct labor cost totaled $11,800 and direct labor…

A: Total Manufacturing Cost = Prime Cost + Manufacturing Overheads

Q: The Boxwood Machining Co. has the following information for last year: Tons of metal input…

A: Partial productivity for labor: Partial productivity for labor is the relationship between the total…

Q: K Company estimates that overhead costs for the next year will be $4,000,000 for indirect labor and…

A: Given: Cost for indirect labour = $ 4,000,000 Cost for factory utilities = $ 970,000 Direct labour…

Q: brahim Corporation has the following estimated costs for the year: Direct Materials Rs. 20,000…

A: Formula used to calculate overhead rate per hour is as follow:

Q: Perteet Corporation's relevant range of activity is 8,400 units to 16,000 units. When it produces…

A: SOLUTION- Manufacturing overhead is all indirect costs incurred during the production process. This…

Q: Roper Furniture manufactures office furniture and tracks cost data across their process. The…

A: Cost Classification: This includes the separation of expenses in the categories it belongs to. The…

Q: RLW-II Enterprises estimated that indirect manufacturing costs for the year would be $75 million and…

A: Cost: It can be defined as the total amount that is spent by a business in manufacturing a product.

Q: Fringe Benefits: Home Allocation Rate x Weight of Base Allocated Cost %3D $ %3D %3D %3D Total $4…

A: Best cover driver for employee fringe benefits is direct labor and for indirect materials is direct…

Q: Carr Company provides human resource consulting services to small- and medium sized companies, Last…

A: 600 Clients 900 Clients 1000 Clients Total Costs (in $) Fixed Cost 540000 540000 540000…

Q: A manufacturing company applies factory overhead based on direct labor hours. At the beginning of…

A: Calculate overhead rate as per DLHs:Overhead rate = Estimated overhead costs / Estimated Direct…

Q: Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000…

A: Introduction: Income statement is one of the financial statements prepared by every company for…

Q: Next year, Manny’s Mowing Service expects to use 31,200 direct labor hours and have a total…

A: The predetermined overhead rate is calculated as estimated overhead cost divided by estimated base…

Q: Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company…

A: The income statement is the statement the company prepares to calculate net income or loss after…

Q: Moss Ltd. has the following activities: creating bills of materials (BOM), studying manufacturing…

Q: [The following information applies to the questions displayed below.] Cool Sky reports the following…

A: Formula: Absorption costing: Unit product cost = Direct materials + direct labor + variable overhead…

Q: Fairground, Inc. is a manufacturer. During its first year of operations, the firm produced 21,600…

A: Ending inventory = Units produced - units sold = 21,600 units - 18,900 units = 2,700 units

Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

Question 27

Bass Accounting Services expects its accountants to work a total of 28,000 direct labor hours per year. The company's estimated total indirect costs are $336,000. The company uses direct labor hours as the allocation base for indirect costs
What is the indirect cost allocation rate?
O A. $24.00 per hour
O B. $120.00 per hour
OC. $14.40 per hour
O D. $12.00 per hour

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the estimated cost driver of 240,000 direct labor hours. It manufactures three products and estimates these costs: If the labor rate is $25 per hour, what is the per-unit cost of each product?
Green Bay Cheese Company estimates its overhead to be $375,000. It expects to have 125,000 direct labor hours costing $1,500,000 in labor and utilizing 15,000 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
Steeler Towel Company estimates its overhead to be $250,000. It expects to have 100,000 direct labor hours costing $2,500,000 in labor and utilizing 12,500 machine hours. Calculate the predetermined overhead rate using: A. Direct labor hours B. Direct labor dollars C. Machine hours
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Natur-Gro, Inc., manufactures composters. Based on past experience, Natur-Gro has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 264,000 + 1.42X, where X equals number of composters. Last year, Natur-Gro produced 30,000 composters. Actual overhead costs for the year were as expected. Total overhead for per unit was a. 1.42 b. 8.80 c. 11.63 d. 10.22
Crystal Pools estimates overhead will utilize 250,000 machine hours and cost $750,000. It takes 2 machine hours per unit, direct material cost of $14 per unit, and direct labor of $20 per unit. What is the cost of each unit produced?
Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. Wood used to produce desks ($125,00 per desk) Production labor used to produce desks ($15 per hour) Production supervisor salary ($45,000 per year) Depreciation on factory equipment ($60,000 per year) Selling and administrative expenses ($45,000 per year) Rent on corporate office ($44,000 per year) Nails, glue, and other materials required to produce desks (varies per desk) Utilities expenses for production facility Sales staff commission (5% of gross sales)
York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of direct labor. The cost to make job 0325 is $70 in aluminum and two hours of labor at $20 per hour. During the month. York incurs $50 in indirect material cost. $150 in administrative labor, $300 in utilities, and $250 in depreciation expense. What is the predetermined overhead rate if direct labor hours are considered the cost driver? What is the cost of Job 0325? What is the overhead incurred during the month?
Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?
Boarders estimates overhead will utilize 160,000 machine hours and cost $80,000. It takes 4 machine hours per unit, direct material cost of $5 per unit, and direct labor of $5 per unit. What is the cost of each unit produced?
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of 168,000 for next year. Service Department 2 has total budgeted costs of 280,000 for next year. Minor allocates service department costs solely to the producing departments. Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1? a. 173,600 b. 140,000 c. 134,400 d. 274,400