What type of industry is likely to use a process cost system? List examples
Part A
What type of industry is likely to use a
Why is it important to establish appropriate cost pools?
PART B
An electrical component manufacturer has selected direct labour hours as an application base.
They plan to sell 35,000 units of copper tubing although the factory has the capacity to produce 40,000 units under normal circumstances.
• Indirect materials and supplies $96,200
• Repairs and maintenance $24,100
• Plant service contracts $37,000
• Refurbishing cost $89,100 • Machinery
• Factory insurance $18,200
• Property taxes $4,500
• Heat, light and power $51,700
• Miscellaneous factory overhead $6,000
• indirect Labour $120,000.00
• Materials $80,000.00
• Transportation $25,000.00
• Rent $40,000.00
• Security Cost $15,000.00
All overhead costs except depreciation, property taxes and miscellaneous factory overhead are expected to increase by 10% during the year. Depreciation should increase by 12% and a 20% increase in property taxes and miscellaneous overhead is expected.
A total of 55,600 direct labour hours was actually used to produce 35,000 units of copper tubing . Direct labour hours is expected to increase to 60,000 hours as production volume increases.
a. Calculate the predetermined overhead rate
b. Determine the Total estimated overheads?
c. Calculate the overhead application rate if 60,000 Direct Labour hours was used in production
Ascertain the overhead applied to the job if it took 120 direct labor hours.
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