Forsythe, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: 1(Click the icon to view the budgeted costs and activity bases.) Read the requirements2. Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH (1) ÷ (2) = allocation rate Materials handling ÷ = Machine setup ÷ = Insertion of parts ÷ = Finishing ÷ = Requirement 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. Begin by selecting the formula to allocate overhead (OH) costs. (3) × (4) = Allocated mfg. overhead costs Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.) Job 86: Allocated Mfg. OH Cost Materials handling Machine setup Insertion of parts Finishing Total mfg. OH costs 1: Data Table Activity Total Budgeted Cost Allocation Base Materials handling $14,000 Number of parts Machine setup 4,200 Number of setups Insertion of parts 52,000 Number of parts Finishing 78,000 Finishing direct labor hours Total $148,200 Forsythe expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,000 parts, require 5 setups, and consume 2,000 hours of finishing time. 2: Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (1) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (2) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (3) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate (4) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate

Forsythe, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: 1(Click the icon to view the budgeted costs and activity bases.) Read the requirements2. Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH (1) ÷ (2) = allocation rate Materials handling ÷ = Machine setup ÷ = Insertion of parts ÷ = Finishing ÷ = Requirement 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. Begin by selecting the formula to allocate overhead (OH) costs. (3) × (4) = Allocated mfg. overhead costs Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.) Job 86: Allocated Mfg. OH Cost Materials handling Machine setup Insertion of parts Finishing Total mfg. OH costs 1: Data Table Activity Total Budgeted Cost Allocation Base Materials handling $14,000 Number of parts Machine setup 4,200 Number of setups Insertion of parts 52,000 Number of parts Finishing 78,000 Finishing direct labor hours Total $148,200 Forsythe expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,000 parts, require 5 setups, and consume 2,000 hours of finishing time. 2: Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (1) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (2) Actual overhead costs Actual qty of the allocation base used Estimated overhead costs Estimated qty of the allocation base (3) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate (4) Actual overhead costs Estimated overhead costs Expected qty of the allocation base used Predetermined OH allocation rate

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...

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Forsythe,

Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows:

1(Click

the icon to view the budgeted costs and activity bases.)

Read the

requirements2.

Requirement 1. Compute the predetermined overhead allocation rate for each activity.

Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.)

						Predetermined OH
	(1)	÷	(2)	=	allocation rate

Materials handling

Machine setup

Insertion of parts

Finishing

Requirement 2. Job 86 required the production of

140

bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86.

Begin by selecting the formula to allocate overhead (OH) costs.

(3)

(4)

Allocated mfg. overhead costs

Job 86 required the production of

140

bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. (Round all amounts to the nearest cent.)

Job 86:	Allocated Mfg. OH Cost
Materials handling
Machine setup
Insertion of parts
Finishing
Total mfg. OH costs

1: Data Table

Activity	Total Budgeted Cost	Allocation Base
Materials handling	$14,000	Number of parts
Machine setup	4,200	Number of setups
Insertion of parts	52,000	Number of parts
Finishing	78,000	Finishing direct labor hours
Total	$148,200

Forsythe

expects to produce

500

chrome bumpers during the year. The bumpers are expected to use

2,000

parts, require

setups, and consume

2,000

hours of finishing time.

2: Requirements

1.	Compute the predetermined overhead allocation rate for each activity.
2.	Job 86 required the production of 140 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86.

(1)

Actual overhead costs

Actual qty of the allocation base used

Estimated overhead costs

Estimated qty of the allocation base

(2)

Actual overhead costs

Actual qty of the allocation base used

Estimated overhead costs

Estimated qty of the allocation base

(3)

Actual overhead costs

Estimated overhead costs

Expected qty of the allocation base used

Predetermined OH allocation rate

(4)

Actual overhead costs

Estimated overhead costs

Expected qty of the allocation base used

Predetermined OH allocation rate

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