Answered step by step
Verified Expert Solution
Question
1 Approved Answer
15) Neptune Inc. manufactures steal structures to civil engineering companies. Neptune's factory has three production departments and the table below shows the estimated manufacturing overhead,
15) Neptune Inc. manufactures steal structures to civil engineering companies. Neptune's factory has three production departments and the table below shows the estimated manufacturing overhead, direct labor-hours and machine-hours for each department. Drilling R$ 2,304,000 Assembling R$ 2,736,000 Cutting Manufacturing R$ 504,000 overhead (estimated) Direct labor-hours 60,000h (estimated) Machine-hours 960,000h (estimated) 96,000h 144,000h 480,000h 360,000h The order request no. 101 has spent the following direct labor hours and machine hours: Direct labor-hours Machine-hours Cutting 2,000h 20,000h Drilling 2,500h 3,000h Assembling 3,000h 2,000h Required: (a) Using the concepts of absorption costing by the job-order costing method (i.e., not considering departments when assigning costs), calculate the predetermined overhead rate using the direct labor-hour as the allocation base. Next, assign the manufacturing overhead to the order request no. 101. (b) Using the concepts from process costing (i.e., considering departments when assigning costs), calculate the predetermined overhead rate using machine-hours as the allocation base for the cutting department and direct labor-hours as the allocation base for the drilling and assembling departments. Next, assign the manufacturing overhead to the order request no. 101. (c) Compare the results obtained from items (a) and (b) and explain why Neptune Inc. should choose either the job-order costing or the process costing
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started