1.
2.
3.
More Info The estimated costs for the Cutting Department are $156,000. They will be allocated based on direct labor hours, which are estimated to be 130,000 hours for the year. The estimated costs for the Sewing Department are $378,000. Those costs will be allocated based on machine hours, which are estimated to be 180,000 hours for the year. In June, the company incurred 6,000 direct labor hours in Cutting and 14,500 machine hours in Sewing. The Eckert Shirt Company manufactures shirts in two departments: Cutting and Sewing. The company allocates manufacturing overhead using a single plantwide rate with direct labor hours as the allocation base. Estimated overhead costs for the year are $560,000, and estimated direct labor hours are 160,000. In June, the company incurred 18,400 direct labor hours. 1. Compute the predetermined overhead allocation rate. 2. Determine the amount of overhead allocated in June. The Eckert Shirt Company has refined its allocation system by separating manufacturing overhead costs into two cost poolsone for each department. (Click the icon to view the estimated costs and allocation data for each department.) 3. Compute the predetermined overhead allocation rates for each department. 4. Determine the total amount of overhead allocated in June. 1. Compute the predetermined overhead allocation rate. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate using a single plantwide rate with direct labor hours as the allocation base.. Predetermined OH allocation rate = x Data Table Assembly Department Total Packaging Department 164,000 $ Overhead costs 460,000 $ 624,000 Machine hours: Basic Model 165,500 MHR 122,000 MHr 104,500 MHr 128,000 MHT 270,000 MHT 250,000 MHr Professional Model 287,500 MHr Total 232,500 MHr 520,000 MHT Direct labor hours: Basic Model 50,000 DLHO 395,000 DLHO 65,000 DLHO 345,000 DLHr 115,000 DLHr 740,000 DLHr Professional Model 445,000 DLHO 410,000 DLHO 855,000 DLHO Total Requirement Compute the predetermined overhead allocation rates using machine hours as the allocation base for the Assembly Department and direct labor hours for the Packaging Department. How much overhead is allocated to the basic model? To the professional model? Round allocation rates to two decimal places and allocated costs to whole dollars. Woodall makes handheld calculators in two models--basic and professional--and wants to refine its costing system by allocating overhead using departmental rates. The estimated $624,000 of manufacturing overhead has been divided into two cost pools: Assembly Department and Packaging Department. The following data have been compiled: (Click the icon to view the data.) Read the requirements. Compute the predetermined overhead allocation rates using machine hours as the allocation base for the Assembly Department and direct labor hours for the Packaging Department. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each department. (Abbreviation used: Qty = quantity. Enter the allocation rates to the nearest cent.) Predetermined OH allocation rate Data Table Total Budgeted Activity Cost Allocation Base Materials handling 15,000 Number of parts Machine setup 4,200 Number of setups Insertion of parts 48,000 Number of parts 81,000 Finishing Finishing direct labor hours $ 148,200 Total Farragut expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 5 setups, and consume 2,000 hours of finishing time. Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 180 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86. Farragut, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: |(Click the icon to view the budgeted costs and activity bases.) Read the requirements. Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH . = allocation rate
