Answered: Textra Plastics produces parts for a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1MC: Active Frame, Inc., manufactures clear and tinted sport glasses. The manufacturing of clear glasses...

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Textra Plastics produces parts for a variety of small machine manufacturers. Most products go through two operations, molding and trimming, before they are ready for packaging. Expected costs and activities for the molding department and for the trimming department for 2017 follow.

	Molding	Trimming
Direct labor hours		52,000	DLH		48,000	DLH
Machine hours		30,500	MH		3,600	MH
Overhead costs	$	730,000		$	590,000

Data for two special order parts to be manufactured by the company in 2017 follow.

	Part A27C	Part X82B
Number of units		9,800	units	54,500	units
Machine hours
Molding		5,100	MH	1,020	MH
Trimming		2,600	MH	650	MH
Direct labor hours
Molding		5,500	DLH	2,150	DLH
Trimming		700	DLH	3,500	DLH

Required:
1. Compute the plantwide overhead rate using direct labor hours as the base.
2. Determine the overhead cost assigned to each product line using the plantwide rate computed in requirement 1.

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