Question

1. Activity Cost Pool Activity Measure Estimated Overhead Costs Expected Activity Machine Setup Number of Setups...

1.

 Activity Cost Pool Activity Measure Estimated Overhead Costs Expected Activity Machine Setup Number of Setups 20,000 50 Special Processing Machine Hours 200,000 8,000 General Factory Direct labor Hours 250,000 12,500

Calculate the activity rate for the following:

Machine Setup: ____________

Special Processing: ____________

General Factory: ____________

2.

 Product A Product B Product C Direct Labor Costs \$    40,000.00 \$ 190,000.00 \$ 50,000.00 Direct Materials \$ 100,000.00 \$ 120,000.00 \$ 60,000.00 Number of Setups 30 10 15 Machine hours 5000 2800 3000 direct labor hours 2500 11875 2000

Calculate the total costs associated with Product A, Product B, and Product C for this month’s production run:

Total Costs Product A: ____________

Total Costs Product B: ____________

Total Costs Product C: ____________

Actual manufacturing overhead for the month was \$625,500. Note that all over/under applied overhead is applied to cost of goods sold at the end of the month. Answer the following questions:

Was manufacturing overhead over or under applied? ____________

What is the amount of over/under applied overhead? ____________

1. Activity rate = Estimated overhead costs/Expected activity

Machine Setup: \$20000/50 = \$400 per setup

Special Processing: \$200000/8000 = \$25 per machine hour

General Factory: \$250000/12500 = \$20 per direct labor hour

2.

 Product A Product B Product C Direct labor costs 40000 190000 50000 Direct materials 100000 120000 60000 Overheads: Machine setup 12000 4000 6000 Special processing 125000 70000 75000 General factory 50000 237500 40000 Total overheads 187000 311500 121000 Total costs 327000 621500 231000

3.

 Actual manufacturing overhead 625500 Manufacturing overhead applied (\$187000 + \$311500 + \$121000) 619500 Under-applied overhead \$ 6000