Question
Question #3 The lead accountant has compiled the following data in preparation for allocating overhead to...
Question #3 The lead accountant has compiled the following data in preparation for allocating overhead to three cost drivers. Overhead Costs Utilities Admin/MGMT Factory Costs
Which of the three methods causes the Final Product Cost of Widget-3 to exceed $800? SHOW CALCULATIONS. In 30 words or less, why did this occur?\
|
Utilities |
$110,000 |
Utilities (phone, electric, water, gas, etc.) |
||
|
Admin/MGMT |
$520,000 |
CEO, VPs, Supervisors, Secretary staff costs |
||
|
Factory Costs |
$870,000 |
Building lease & equipment |
||
|
TOTAL OVERHEAD |
$1,500,000 |
|||
|
Labor Hrs Per Widget |
Direct Labor Cost per Widget |
Std Labor Rate ($/hr): |
$30.00 |
|
|
Widget-1 |
4 |
$120.00 |
||
|
Widget-2 |
8 |
$240.00 |
||
|
Widget-3 |
16 |
$480.00 |
||
|
Drivers |
||||
|
Units Produced in Factory (all inclusive) |
45,000 |
Widget-1 |
25,000 |
units per month |
|
Widget-2 |
15,000 |
units per month |
||
|
Widget-3 |
5,000 |
units per month |
||
|
Direct Labor Hours |
300,000 |
Widget-1 |
100,000 |
hours per month |
|
Widget-2 |
120,000 |
hours per month |
||
|
Widget-3 |
80,000 |
hours per month |
||
|
Raw Material Costs |
$25.00 |
per unit of Widget-1 |
||
|
$50.00 |
per unit of Widget-2 |
|||
|
$200.00 |
per unit of Widget-3 |
|||
Homework Answers
Answer #1
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