Single Plantwide Factory Overhead Rate: per combing hour Raw Wool Wool Yarn Allocated factory overhead cost
Single Plantwide Factory Overhead Rate: per combing hour Raw Wool Wool Yarn Allocated factory overhead cost
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 5CE: Roberts Company produces two weed eaters: basic and advanced. The company has four activities:...
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![Single Plantwide Factory Overhead Rate: $
per combing hour
Raw Wool
Wool Yarn
Allocated factory overhead cost
2$
Feedback
V Check My Work
Review the single plantwide factory overhead rate method, and allocate the costs using a single plantwide factory overhead rate and the combing hours used by
each product.
Activity-Based Costing
In order to compare WoolCorp's current method with activity-based costing, you interview the production staff and compile the following information, which relates to the
costs for raw wool and wool yarn.
Туре of Cost
Activity Base
Total Cost
Sorting
Hours of sorting
$25,600
Cleaning
Units of cleaning machine power
38,400
Combing
Hours of combing machine use
1,300
Raw Wool
Wool Yarn
Hours of sorting required
800
3,200
Units of cleaning machine power required
1,800
4,200
Hours of combing machine use required
80
20](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F077a314e-9e39-4986-ac3f-0d4db6fe2adf%2Ff80a7820-401f-4d48-bc68-99fc26844ef3%2Ff2vgaxc_processed.png&w=3840&q=75)
Transcribed Image Text:Single Plantwide Factory Overhead Rate: $
per combing hour
Raw Wool
Wool Yarn
Allocated factory overhead cost
2$
Feedback
V Check My Work
Review the single plantwide factory overhead rate method, and allocate the costs using a single plantwide factory overhead rate and the combing hours used by
each product.
Activity-Based Costing
In order to compare WoolCorp's current method with activity-based costing, you interview the production staff and compile the following information, which relates to the
costs for raw wool and wool yarn.
Туре of Cost
Activity Base
Total Cost
Sorting
Hours of sorting
$25,600
Cleaning
Units of cleaning machine power
38,400
Combing
Hours of combing machine use
1,300
Raw Wool
Wool Yarn
Hours of sorting required
800
3,200
Units of cleaning machine power required
1,800
4,200
Hours of combing machine use required
80
20
![WoolCorp buys sheep's wool from farmers. The company began operations in January of this year, and is making decisions on product offerings, pricing, and vendors. The
company is also examining its method of assigning overhead to products. You've just been hired as a production manager at WoolCorp.
Currently WoolCorp makes two products: (1) raw, clean wool to be used as stuffing or insulation and (2) wool yarn for use in the textile industry.
The company would like you to evaluate its costing methods for its raw wool and wool yarn.
Single Plantwide Rate
WoolCorp is currently using the single plantwide factory overhead rate method, which uses a predetermined overhead rate based on an estimated allocation base such as
direct labor hours or machine hours. The rate is computed as follows:
Single Plantwide Factory Overhead Rate =
(Total Budgeted Factory Overhead) + (Total Budgeted Plantwide Allocation Base)
WoolCorp has been using combing machine hours as its allocation base.
The company would like to consider activity-based costing. In order to understand their current system better, you evaluate WoolCorp's current method of costing for raw
wool and wool yarn. The production staff has compiled the following information for you on the production of 500 pounds of either raw wool or wool yarn:
Budgeted
Factory
Factory
Overhead Type
Overhead
Sorting
$25,600
Cleaning
38,400
Combing
1,300
Raw Wool
Wool Yarn
Hours of combing machine use required
80
20
In the following table, use combing machine hours as the allocation base for assigning overhead costs to each product. When required, round your answers to the
nearest dollar.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F077a314e-9e39-4986-ac3f-0d4db6fe2adf%2Ff80a7820-401f-4d48-bc68-99fc26844ef3%2F102f74v_processed.png&w=3840&q=75)
Transcribed Image Text:WoolCorp buys sheep's wool from farmers. The company began operations in January of this year, and is making decisions on product offerings, pricing, and vendors. The
company is also examining its method of assigning overhead to products. You've just been hired as a production manager at WoolCorp.
Currently WoolCorp makes two products: (1) raw, clean wool to be used as stuffing or insulation and (2) wool yarn for use in the textile industry.
The company would like you to evaluate its costing methods for its raw wool and wool yarn.
Single Plantwide Rate
WoolCorp is currently using the single plantwide factory overhead rate method, which uses a predetermined overhead rate based on an estimated allocation base such as
direct labor hours or machine hours. The rate is computed as follows:
Single Plantwide Factory Overhead Rate =
(Total Budgeted Factory Overhead) + (Total Budgeted Plantwide Allocation Base)
WoolCorp has been using combing machine hours as its allocation base.
The company would like to consider activity-based costing. In order to understand their current system better, you evaluate WoolCorp's current method of costing for raw
wool and wool yarn. The production staff has compiled the following information for you on the production of 500 pounds of either raw wool or wool yarn:
Budgeted
Factory
Factory
Overhead Type
Overhead
Sorting
$25,600
Cleaning
38,400
Combing
1,300
Raw Wool
Wool Yarn
Hours of combing machine use required
80
20
In the following table, use combing machine hours as the allocation base for assigning overhead costs to each product. When required, round your answers to the
nearest dollar.
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