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Problem 4-57 Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: Welding Assembly Finishing Estimated overhead $220,000 $ 62,000 $150,000 Direct labor hours 4,500 10,000 6,000 Direct labor cost $ 90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various de- partments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 Direct materials $6,725 $9,340 Direct labor cost $1,800 $3,100 Direct labor hours: Welding Assembly Finishing Number of machine hours: 20 10 60 20 20 70 Welding Assembly Finishing 50 50 60 25 90 125 The typical bid price includes a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates?

Problem 4-57 Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: Welding Assembly Finishing Estimated overhead $220,000 $ 62,000 $150,000 Direct labor hours 4,500 10,000 6,000 Direct labor cost $ 90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various de- partments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 Direct materials $6,725 $9,340 Direct labor cost $1,800 $3,100 Direct labor hours: Welding Assembly Finishing Number of machine hours: 20 10 60 20 20 70 Welding Assembly Finishing 50 50 60 25 90 125 The typical bid price includes a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates?

Managerial Accounting
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 1BE: Single plantwide factory overhead rate The total factory overhead for Bardot Marine Company is...
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cr OBJECTIVE Problem 4-57 Overhead Rates, Unit Costs al r an Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: EXCEL Welding Assembly Finishing Estimated overhead $220,000 $ 62,000 $150,000 Direct labor hours Direct labor cost 4,500 10,000 6,000 $ 90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various de- partments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 Direct materials $6,725 $9,340 Direct labor cost $1,800 $3,100 Direct labor hours: Welding Assembly Finishing 20 10 60 20 20 70 Number of machine hours: Welding Assembly Finishing 50 50 60 25 90 125 The typical bid price includes a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates?
Transcribed Image Text:cr OBJECTIVE Problem 4-57 Overhead Rates, Unit Costs al r an Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: EXCEL Welding Assembly Finishing Estimated overhead $220,000 $ 62,000 $150,000 Direct labor hours Direct labor cost 4,500 10,000 6,000 $ 90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various de- partments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 Direct materials $6,725 $9,340 Direct labor cost $1,800 $3,100 Direct labor hours: Welding Assembly Finishing 20 10 60 20 20 70 Number of machine hours: Welding Assembly Finishing 50 50 60 25 90 125 The typical bid price includes a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? 2. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates?
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