Question

Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:

Product	Machine Hours	Setups	Receiving Orders	Packing Orders
Infantry	20,900	300	810	1,620
Special Forces	20,900	100	90	810
Costs	$96,140	$24,320	$16,290	$29,160

	Required:
1.	Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. (Round overhead rate answer to two decimal places and other answers to the nearest dollar.)
2.	Calculate consumption ratios for each activity. (Round to two decimal places.)
3.	Calculate a rate for each activity by using the associated driver. (Round to two decimal places.)
4.	Assign the overhead costs to each product by using the activity rates computed in Requirement 3.
5.	CONCEPTUAL CONNECTION: Comment on the difference between the assignment in Requirement 1 and the activity-based assignment.

Total Overhead & Consumption Ratios

1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide rate. (Round overhead rate answer to two decimal places and other answers to the nearest dollar.)

The overhead rate is  per machine hour.

The total overhead assigned to the infantry product is .

The total overhead assigned to the Special Forces product is .

2. Calculate consumption ratios for each activity. (Round your answers to two decimal places.)

	Consumption Ratios
Overhead Activity	Infantry	Special Forces
Machining
Setups
Receiving
Packing

Activity Rate & Overhead Costs

3. Calculate a rate for each activity by using the associated driver.

Machining:	per machine hour
Setups:	per setup
Receiving:	per receiving order
Packing:	per packing order

4. Assign the overhead costs to each product by using the activity rates computed in Requirement 3.

Tristar Manufacturing

Overhead Assignment

1		Infantry	Special Forces
2	Machining
3	Setups
4	Receiving
5	Packing
6	Total

Conceptual Connection

5. CONCEPTUAL CONNECTION: Complete the statements below on the difference between the assignment calculated in Requirement 1 and the activity-based assignment.

Using only machine hours the infantry product and the special forces product. The reveal this before the actual calculations are made.

Answer 1

1	Total overhead	165910	(96140+24320+16290+29160)
	Total machine hours	41800
	The overhead rate is per machine hour =	3.969139	per machine hour	(165910/41800)
	The total overhead assigned to the infantry product is	82955
	The total overhead assigned to the Special Forces product is	82955
2
		Consumption Ratios
	Overhead Activity	Infantry	Special Forces
	Machining	0.5	0.5
	Setups	0.75	0.25
	Receiving	0.9	0.1
	Packing	0.67	0.33
3
	Machining:	2.3	per machine hour
	Setups:	60.8	per setup
	Receiving:	18.1	per receiving order
	Packing:	12	per packing order
4		Overhead Assignment
1		Infantry	Special Forces
2	Machining	48070	48070
3	Setups	18240	6080
4	Receiving	14661	1629
5	Packing	19440	9720
6	Total	100411	65499