Exercise 9-38 and 9-39 (Static)Skip to question Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1V-2Units produced 10,000 1,000 Direct materials cost per unit$2 $4 Machine hours per unit 1 2 Production runs per month 80 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation$36,000 Setup labor 18,000 Material handling 14,400 Total$68,400 Exercise 9-38 (Static) Activity-Based Costing and Cost Driver Rates (LO 9-4)Required:a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.)b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.

Answered: Exercise 9-38 and 9-39 (Static) Skip to…

Exercise 9-38 (Static) Activity-Based Costing and Cost Driver Rates (LO 9-4)

Exercise 9-38 and 9-39 (Static)

Overhead Rate = Total Overheads / Total Machine Hours Cost Driver Rate = Activity Overhead Cost /…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 19BEA: Use the following information for Brief Exercises 2-19 and 2-20: Slapshot Company makes ice hockey...

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Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow.

Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow.


Machine depreciation	$	36,000
Setup labor		18,000
Material handling		14,400
Total	$	68,400

Units produced

Direct materials cost per unit

Machine hours per unit

Production runs per month

Required:

a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.)
b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.

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