Question

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two...

Xie Company identified the following activities, costs, and activity drivers for 2017. The company manufactures two types of go-karts: Deluxe and Basic.

Activity Expected Costs Expected Activity
Handling materials $ 625,000 100,000 parts
Inspecting product 900,000 1,500 batches
Processing purchase orders 105,000 700 orders
Paying suppliers 175,000 500 invoices
Insuring the factory 300,000 40,000 square feet
Designing packaging 75,000 2 models

   
Required:
1. Compute a single plantwide overhead rate, assuming that the company assigns overhead based on 125,000 budgeted direct labor hours.
2. In January 2017, the Deluxe model required 2,500 direct labor hours and the basic model required 6,000 direct labor hours. Assign overhead costs to each model using the single plantwide overhead rate.

Homework Answers

Answer #1

1. single plantwide overhead rate = Total Expected Costs / Total budgeted direct labor hours

= $ 2,180,000 / 125,000 Hours

= $ 17.44 per direct labor hour.

Hence the correct answer is $ 17.44

2. Overhead costs assigned to  Deluxe model = single plantwide overhead rate * Total direct labor hours for the Deluxe model

= $ 17.44 * 2,500 direct labor hours

= $ 43,600

Overhead costs assigned to  Basic model = single plantwide overhead rate * Total direct labor hours for the Basic model

= $ 17.44 * 6,000 direct labor hours

= $ 104,640

Hence the correct answer is $43,600  and $ 104,600

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Chan Company identified the following activities, costs, and activity drivers for this year. The company manufactures...
Chan Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: fast and standard. Activity Expected Costs Activity Driver Handling materials $ 665,000 190,000 parts Inspecting product 1,188,000 2,160 batches Processing purchase orders 150,000 1,250 orders Paying suppliers 220,000 880 invoices Insuring the factory 390,000 50,000 square feet Designing packaging 84,000 2 models 1. Compute a single plantwide overhead rate assuming that the company assigns overhead based on 145,000 budgeted direct...
Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs,...
Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $446,320 Number of setups 560 Ordering costs 378,400 Number of orders 17,200 Machine costs 844,000 Machine hours 42,200 Receiving 373,700 Receiving hours 10,100 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $612,000 $812,000 Direct...
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:...
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $441,280 Number of setups 560 Ordering costs 318,600 Number of orders 17,700 Machine costs 890,400 Machine hours 42,400 Receiving 294,000 Receiving hours 8,400 Deoro produces two models of dishwashers with the following expected prime costs and activity demands: Model A Model B Direct materials $611,000 $832,000 Direct labor $481,000 $473,000 Units completed 15,400 8,300...
Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year:...
Plata Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $120,000 Number of setups 300 Ordering costs 90,000 Number of orders 9,000 Machine costs 210,000 Machine hours 21,000 Plata produces two models of microwave ovens with the following activity demands: Model X Model Y Units completed 8,000 4,000 Number of setups 200 100 Number of orders 3,000 6,000 Machine hours 12,000 9,000 The company's...
Siegel Company manufactures a product that is available in both a deluxe model and a regular...
Siegel Company manufactures a product that is available in both a deluxe model and a regular model. The company has manufactured the regular model for years. The deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company’s profits have steadily declined and management has become increasingly concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Manufacturing overhead is assigned...
Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company...
Koontz Company manufactures two models of industrial components—a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz’s controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars):     Basic      Advanced      Total Number of units produced and sold      20,000  ...
Equally Accurate Reduced ABC System Silven Company has identified the following overhead activities, costs, and activity...
Equally Accurate Reduced ABC System Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $126,000 Number of setups 150 Ordering materials 18,000 Number of orders 900 Machining 126,000 Machine hours 10,500 Receiving 30,000 Receiving hours 1,250 Silven produces two models of cell phones with the following expected activity demands: Model X Model Y Units completed 5,000 10,000 Number of setups 100 50 Number...
Weston Corporation manufactures a product that is available in both a deluxe and a regular model....
Weston Corporation manufactures a product that is available in both a deluxe and a regular model. The company has made the regular model for years; the deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the deluxe model, the company’s profits have steadily declined, and management has become concerned about the accuracy of its costing system. Sales of the deluxe model have been increasing rapidly. Overhead is applied to products on...
Pretty Dog Corporation manufactures two models of grooming stations, a standard and a deluxe model. The...
Pretty Dog Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 3 30 650 Deluxe 7 50 150 Overhead costs $ 30,000 $ 50,000 Assume a traditional costing system applies the overhead costs based on direct labor hours. Required: a. What is the total amount of overhead costs assigned to the standard model? b....
Tiger Company has identified the following overhead costs and cost drivers for next year: Overhead Item...
Tiger Company has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $583,200 Number of setups 2,400 Ordering costs 270,000 Number of orders 20,000 Maintenance 928,000 Machine-hours 32,000 Power 90,000 Kilowatt-hours 200,000 The following are two of the jobs completed during the year: Job 201 Job 202 Direct materials $9,000 $10,000 Direct labor $12,000 7,000 Units completed 750 600 Direct labor-hours 45 110 Number of setups 6 7...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT