Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments usemachine hours (MH) and direct labor hours (DLH).FabricatingAssembly$480,000Overhead cost1,330,000Direct laborhoursMachine hours412,500 DLH 40,000 DLH95,000 MH78,500 MHLaval reports the following for one of its products, a desk lamp.Fabricating DepartmentMachineHours perUnitМн рerunitAssembly DepartmentMachineHours perUnitDirect LaborDirect LaborNumberHours per UnitHours per Unitof UnitsDesklampDLH per4unitDLH per2unitМн рer0.5unit6,000Required:1. Determine the plantwide overhead rate using 452,500 direct labor hours as the allocation base.2. Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.3. Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hoursin the Assembly department.4. Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.Answer is not complete.Complete this question by entering your answers in the tabs below.Required Required Required Required123Determine the overhead cost per unit for the desk lamp using the departmental overheadrates.HoursOverhead Cost perDepartmentDepartmental Overhead Rateper UnitUnitFabricatingAssemblyTotal< Required 3Required 4 > Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments usemachine hours (MH) and direct labor hours (DLH).Fabricating$1,330,000Assembly24480,000Overhead costDirect laborhoursMachine hours412,500 DLH 40,000 DLH95,000 MH78,500 MHLaval reports the following for one of its products, a desk lamp.Fabricating DepartmentAssembly DepartmentMachineHours perUnitMachineHours perUnitDirect LaborDirect LaborNumberof Units Hours per UnitHours per UnitDLH per4unitМн рer2unitDLH perМн рer0.5unitDesk6,000lampunitRequired:1. Determine the plantwide overhead rate using 452,500 direct labor hours as the allocation base.2. Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.3. Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hoursin the Assembly department.4. Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.Answer is not complete.Complete this question by entering your answers in the tabs below.Required Required Required Required1234Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate.Plantwide OverheadRateHours UsedOverhead Cost per Unitper machinehourDesk lampMHs$24 per unit< Required 1Required 3 >

1. Estimated Overhead CostEstimated Direct Labour Hours=$1,810,000*452,500=$4 per direct labour…

Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). $ 1,330,000 Fabricating Assembly $ 480,000 Overhead cost Direct labor hours Machine hours 412,500 DLH 40,000 DLH 95,000 MH 78,500 MH Laval reports the following for one of its products, a desk lamp. Fabricating Department Assembly Department Direct Labor Hours per Unit Machine Hours per Unit Machine Hours per Unit Direct Labor Number Hours per Unit of Units DLH per 4 unit Мн рer 2 unit DLH per unit Мн рer 0.5 unit Desk 6,000 lamp Required: 1. Determine the plantwide overhead rate using 452,500 direct labor hours as the allocation base. 2. Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate. 3. Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours in the Assembly department. 4. Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.

Laval produces lighting fixtures. Budgeted information for its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). $ 1,330,000 Fabricating Assembly $ 480,000 Overhead cost Direct labor hours Machine hours 412,500 DLH 40,000 DLH 95,000 MH 78,500 MH Laval reports the following for one of its products, a desk lamp. Fabricating Department Assembly Department Direct Labor Hours per Unit Machine Hours per Unit Machine Hours per Unit Direct Labor Number Hours per Unit of Units DLH per 4 unit Мн рer 2 unit DLH per unit Мн рer 0.5 unit Desk 6,000 lamp Required: 1. Determine the plantwide overhead rate using 452,500 direct labor hours as the allocation base. 2. Determine the overhead cost per unit for the desk lamp using the plantwide overhead rate. 3. Compute departmental overhead rates based on machine hours in the Fabricating department and direct labor hours in the Assembly department. 4. Determine the overhead cost per unit for the desk lamp using the departmental overhead rates.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 6E: Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a...

See similar textbooks

Similar questions

Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)
Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead costs per month include supervision of 98,000, depreciation of 76,000, and other overhead of 245,000. Required: 1. Prepare a flexible budget for all costs of production for the following levels of production: 160,000 units, 170,000 units, and 175,000 units. 2. What is the per-unit total product cost for each of the production levels from Requirement 1? (Round each unit cost to the nearest cent.) 3. What if Nashler Companys cost of maintenance rose to 0.22 per unit? How would that affect the unit product costs calculated in Requirement 2?
Bach Instruments Inc. makes three musical instruments: flutes, clarinets, and oboes. The budgeted factory overhead cost is 2,948,125. Overhead is allocated to the three products on the basis of direct labor hours. The products have the following budgeted production volume and direct labor hours per unit: a. Determine the single plant wide overhead rate. b. Use the overhead rate in (a) to determine the amount of total and per-unit overhead allocated to each of the three products, rounded to the nearest dollar.
Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold through specialty golf shops. The company is in the process of developing itsoperating budget for the coming year. Selected data regarding the companys two products areas follows: Manufacturing overhead is applied to units using direct labor hours. Variable manufacturing overhead Ls projected to be 25,000, and fixed manufacturing overhead is expected to be15,000. The estimated cost to produce one unit of the laminated putter head is: a. 42. b. 46. c. 52. d. 62.
Fargo Co. manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Budgeted fixed overhead is $60,000 per period. The standard costs per batch follow: During the period, 503 batches were manufactured, and the following costs were incurred: Required: Calculate the variances for materials, labor, and overhead. For overhead, use the two-variance method. (Hint: Please use the information given about the budgeted fixed overhead to compute the variable overhead rate.)
USD Inc. has established the following standard cost per unit: Although 10,000 units were budgeted, 12,000 units were produced. The Purchasing department bought 50,000 lb of materials at a cost of $237,500. Actual pounds of materials used were 46,000. Direct labor cost was $287,500 for 25,000 hours worked. Required: Make journal entries to record the materials transactions, assuming that the materials price variance was recorded at the time of purchase. Make journal entries to record the labor variances.
Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming year is: Previously, Sanjay Bhatt, Firenza Companys controller, had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 50,000. Sanjay has been reading about activity-based costing, and he wonders whether or not it might offer some advantages to his company. He decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setups for setup cost, engineering hours for engineering cost, and machine hours for other. Budgeted amounts for these drivers are 5,000 purchase orders, 500 setups, and 2,500 engineering hours. Sanjay has been asked to prepare bids for two jobs with the following information: The typical bid price includes a 40 percent markup over full manufacturing cost. Required: 1. Calculate a plantwide rate for Firenza Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate activity rates for the four overhead activities. What is the bid price of each job using these rates? 3. Which bids are more accurate? Why?
Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per unit, direct labor of $3 per unit, and manufacturing overhead of $1 per unit. Fixed costs are $35,000. What would be the budgeted amounts for 20,000 and 25,000 units?
TIB makes custom guitars and prepared the following sales budget for the second quarter It also has this additional information related to its expenses: Direct material per unit $55, Direct labor per hour 20, Variable manufacturing overhead per hour 3.50, Fixed manufacturing overhead per month 3,000, Sales commissions per unit 20, Sales salaries per month 5,000, Delivery expense per unit 0.50, Utilities per month 4,000. Administrative salaries per month 20,000, Marketing expenses per month 8,000, Insurance expense per month 11,000, Depreciation expense per month 9,000. Prepare a sales and administrative expense budget for each month in the quarter ended June 30. 2018.
Jillian Manufacturing Inc. manufactures a single product and uses a standard cost system. The factory overhead is applied on the basis of direct labor hours. A condensed version of the company’s flexible budget follows: The product requires 3 lb of materials at a standard cost of $5 per pound and 2 hours of direct labor at a standard cost of $10 per hour. For the current year, the company planned to operate at the level of 6,250 direct labor hours and to produce 3,125 units of product. Actual production and costs for the year follow: Required: For the current year, compute the factory overhead rate that will be used for production. Show the variable and fixed components that make up the total predetermined rate to be used. Prepare a standard cost card for the product. Show the individual elements of the overhead rate as well as the total rate. Compute (a) standard hours allowed for production and (b) under- or overapplied factory overhead for the year. Determine the reason for any under- or overapplied factory overhead for the year by computing all variances, using each of the following methods: Two-variance method Three-variance method (appendix) Four-variance method (appendix)
Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a residential motor, through two production departments, Assembly and Testing. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering using the multiple production department factory overhead rate method. The following factory overhead was budgeted for Eclipse: Direct machine hours were estimated as follows: In addition, the direct machine hours (dmh) used to produce a unit of each product in each department were determined from engineering records, as follows: a. Determine the per-unit factory overhead allocated to the commercial and residential motors under the single plantwide factory overhead rate method, using direct machine hours as the allocation base. b. Determine the per-unit factory overhead allocated to the commercial and residential motors under the multiple production department factory overhead rate method, using direct machine hours as the allocation base for each department. c. Recommend to management a product costing approach, based on your analyses in (a) and (b). Support your recommendation.
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is 250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. b. Determine the amount of sales order processing cost associated with 30,000 sales orders.