ACET 230 Allecting marked Costs Hondul 15 cost for cheable is building the ho l y The directed and direct laber Direct Materials Direct Laber Overhead House $140.000 210.000 $70.000 130.000 .000 60.000 The building contractor's indirect l y benefits and indirected ore $84000 Required Assume the builder allocates overhead indirect costs on the three Determine the amount of warhead allocated to each how be you think this allocation method is for and code 1 Assume instead thet the builder alle overhead on total direct costs Determine the amount of overhead coa ted to each house Compare the locations determined in requirement with the locations determined urement Identity who will benefit financially and we will suffer of the builders the requirement allocation method instead of allocating overhead equally C. Assume that the $84,000 of total overhead cost consists of $63.000 meleted to the cost of indirect materials and $21.000 related to employee benefits such as health insurance and overtime Suggest a national allocation method to allocate the $84.000 verhead cost and use that method to allocate the cost to the three houses 132 ACET 2301 Cost Allocation Hendel 16 g Ole Tools Company reducin cates Home Toledes in hand tools for indu Professionel Toolse ophids forc workers Otto's content hos identified the following and c e us e d Beber. Machine 2 of 3 132 ACET 2300 Cost Allocation Hendel 16 Otto Tools Company cates Home Tools and in hand tools for inde Professionel Tesis h ed for workers Otto's cut hesited the following with these two products me d us e d Serye ar Dr Twee More Medien Required b Identify the costs that are the direct costs of Home To d irect costs of Professional Tools and indirect costs using the below Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools Assume that each department makes only a single product Home Tools produces its Deluxe Drill for home and Professional produces The Professional Drill The company made 30.000 ts of Deluxe bril end 20 000 units of Professional Drill during the year Determine the total estimated cost of the products made in each part It Otto prices its products et cost plus 30 percent of costwhat price per unit should it charge for the Deluxe Drilond the Professionel Drib 133 Cost Assignment Categories Salary of V. P. of production Salary of manager, home to Salary of manager, professional tools Direct materials cont, home tools Direct materials cont professional tools Direct labor cost home tools Direct labor cost, professional tools company has to production departments focaties Home Telecin honderdduc ed Professionel Toolsce sch o ol for pred en workers. One's sc h eided the following us ed Sale Sony 22REH Required Identify the costs that are the direct costs of Home To d irect costs of Professional Tools, and (3) indirect conting the table belon b. Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools Assume that each department makes only a single product Home Tools produces in Deluxe bril for home and Professional Tools produced The Professional Drill The company de 20 000 ts of Deluxe Dril and 20.000 units of Professionel Drill during the year. Determine the total estimated cost of the products made in each department If Otto prices its products et cont plus 30 percent of cost what price per unit should it charge for the Deluxe Drilond The Professionel Drib 133 Professional Cost Assignment Categories Salary of V.P. of production Salary of manager, home to Salary of manager, professional tools Direct materials cont, home tools Direct materials cost professional tools Direct labor cost, home tools Direct labor cost, professional tools Direct utilities cost, home tools Direct utilities cost, professional tools General factorywide utilities Production supplies Fringe benefits Depreciation Total costs ACCT 2301 Allocating Overhead Costs Handout #15 wurder is building three houses simultaneously. The direct materials and direct labor costs for each house are shown below: Direct Materials Direct Labor Overhead House 1 $140,000 210,000 House 2 $ 70,000 130,000 House 3 $90,000 60,000 The building contractor's tota ding contractor's total indirect costs (such as employee benefits and indirect materials) are $84,000. Required asume The builder allocates overhead (indirect) costs equally among the three houses Determine the amount of overhead cost allocated to each house. Do you think this allocation method is fair and reasonable? . Assume instead that the builder allocates overhead costs based on total direct costs. Determine the amount of overhead cost allocated to each house. Compare the allocations determined in requirement a with the allocations determined in requirement b. Identify who will benefit financially and who will suffer if the builder uses the requirement b allocation method instead of allocating overhead equally. c. Assume that the $84,000 of total overhead cost consists of $63,000 related to the cost of indirect materials and $21,000 related to employee benefits such as health insurance and overtime. Suggest a rational allocation method to allocate the $84,000 overhead cost and use that method to allocate the cost to the three houses. 132 ACCT 2301 Cost Allocation Handout #16 Os company has two production departments in its manufacturing acilities. Home Tools specializes in hond tools for individual home users, and ofessional Tools makes sophisticated tools for professional maintenance Otto's accountant has identified the following annual costs associated with these two products: Facile Salary of vice president of production Salary d e cheme tools Salary Re s to Direct materials cost home tools Direct materials colossional tools Direct labor cosm os Direct labores professionals Direct les coste s Direct uites cosesinatos General factorywide Production salles Pringe benefits Depreciation Nonfinancial data Maching hours, home tools Maching hours, professional tools SI000 54.000 4500 300,000 375.000 335.000 414.000 21.00 1.000 3.500 40.500 150,000 380,000 4,000 2009 Required a. Identify the costs that are the (1) direct costs of Home Tools, (2) direct costs of Professional Tools, and (3) indirect costs using the table below. b. Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools. C. Assume that each department makes only a single product. Home Tools produces its Deluxe Drill for home use, and Professional Tools produces the Professional Drill. The company made 30,000 units of Deluxe Drill and 20,000 units of Professional Drill during the year. Determine the total estimated cost of the products made in each department. If Otto prices its products at cost plus 30 percent of cost, what price per unit should it charge for the Deluxe Drill and the Professional Drill? 133 Home Tools Professional Tools Indirect Cost Assignment Categories Salary of V. P. of production Salary of manager, home tools Salary of manager, professional tools Direct materials cost, home tools Direct materials cost, professional tools Direct labor cost, home tools Direct labor cost, professional tools Direct utilities cost, home tools Direct utilities cost, professional tools General factorywide utilities Production supplies Fringe benefits Depreciation Total costs ACET 230 Allecting marked Costs Hondul 15 cost for cheable is building the ho l y The directed and direct laber Direct Materials Direct Laber Overhead House $140.000 210.000 $70.000 130.000 .000 60.000 The building contractor's indirect l y benefits and indirected ore $84000 Required Assume the builder allocates overhead indirect costs on the three Determine the amount of warhead allocated to each how be you think this allocation method is for and code 1 Assume instead thet the builder alle overhead on total direct costs Determine the amount of overhead coa ted to each house Compare the locations determined in requirement with the locations determined urement Identity who will benefit financially and we will suffer of the builders the requirement allocation method instead of allocating overhead equally C. Assume that the $84,000 of total overhead cost consists of $63.000 meleted to the cost of indirect materials and $21.000 related to employee benefits such as health insurance and overtime Suggest a national allocation method to allocate the $84.000 verhead cost and use that method to allocate the cost to the three houses 132 ACET 2301 Cost Allocation Hendel 16 g Ole Tools Company reducin cates Home Toledes in hand tools for indu Professionel Toolse ophids forc workers Otto's content hos identified the following and c e us e d Beber. Machine 2 of 3 132 ACET 2300 Cost Allocation Hendel 16 Otto Tools Company cates Home Tools and in hand tools for inde Professionel Tesis h ed for workers Otto's cut hesited the following with these two products me d us e d Serye ar Dr Twee More Medien Required b Identify the costs that are the direct costs of Home To d irect costs of Professional Tools and indirect costs using the below Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools Assume that each department makes only a single product Home Tools produces its Deluxe Drill for home and Professional produces The Professional Drill The company made 30.000 ts of Deluxe bril end 20 000 units of Professional Drill during the year Determine the total estimated cost of the products made in each part It Otto prices its products et cost plus 30 percent of costwhat price per unit should it charge for the Deluxe Drilond the Professionel Drib 133 Cost Assignment Categories Salary of V. P. of production Salary of manager, home to Salary of manager, professional tools Direct materials cont, home tools Direct materials cont professional tools Direct labor cost home tools Direct labor cost, professional tools company has to production departments focaties Home Telecin honderdduc ed Professionel Toolsce sch o ol for pred en workers. One's sc h eided the following us ed Sale Sony 22REH Required Identify the costs that are the direct costs of Home To d irect costs of Professional Tools, and (3) indirect conting the table belon b. Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools Assume that each department makes only a single product Home Tools produces in Deluxe bril for home and Professional Tools produced The Professional Drill The company de 20 000 ts of Deluxe Dril and 20.000 units of Professionel Drill during the year. Determine the total estimated cost of the products made in each department If Otto prices its products et cont plus 30 percent of cost what price per unit should it charge for the Deluxe Drilond The Professionel Drib 133 Professional Cost Assignment Categories Salary of V.P. of production Salary of manager, home to Salary of manager, professional tools Direct materials cont, home tools Direct materials cost professional tools Direct labor cost, home tools Direct labor cost, professional tools Direct utilities cost, home tools Direct utilities cost, professional tools General factorywide utilities Production supplies Fringe benefits Depreciation Total costs ACCT 2301 Allocating Overhead Costs Handout #15 wurder is building three houses simultaneously. The direct materials and direct labor costs for each house are shown below: Direct Materials Direct Labor Overhead House 1 $140,000 210,000 House 2 $ 70,000 130,000 House 3 $90,000 60,000 The building contractor's tota ding contractor's total indirect costs (such as employee benefits and indirect materials) are $84,000. Required asume The builder allocates overhead (indirect) costs equally among the three houses Determine the amount of overhead cost allocated to each house. Do you think this allocation method is fair and reasonable? . Assume instead that the builder allocates overhead costs based on total direct costs. Determine the amount of overhead cost allocated to each house. Compare the allocations determined in requirement a with the allocations determined in requirement b. Identify who will benefit financially and who will suffer if the builder uses the requirement b allocation method instead of allocating overhead equally. c. Assume that the $84,000 of total overhead cost consists of $63,000 related to the cost of indirect materials and $21,000 related to employee benefits such as health insurance and overtime. Suggest a rational allocation method to allocate the $84,000 overhead cost and use that method to allocate the cost to the three houses. 132 ACCT 2301 Cost Allocation Handout #16 Os company has two production departments in its manufacturing acilities. Home Tools specializes in hond tools for individual home users, and ofessional Tools makes sophisticated tools for professional maintenance Otto's accountant has identified the following annual costs associated with these two products: Facile Salary of vice president of production Salary d e cheme tools Salary Re s to Direct materials cost home tools Direct materials colossional tools Direct labor cosm os Direct labores professionals Direct les coste s Direct uites cosesinatos General factorywide Production salles Pringe benefits Depreciation Nonfinancial data Maching hours, home tools Maching hours, professional tools SI000 54.000 4500 300,000 375.000 335.000 414.000 21.00 1.000 3.500 40.500 150,000 380,000 4,000 2009 Required a. Identify the costs that are the (1) direct costs of Home Tools, (2) direct costs of Professional Tools, and (3) indirect costs using the table below. b. Select the appropriate cost drivers and allocate the indirect costs to home tools and to professional tools. C. Assume that each department makes only a single product. Home Tools produces its Deluxe Drill for home use, and Professional Tools produces the Professional Drill. The company made 30,000 units of Deluxe Drill and 20,000 units of Professional Drill during the year. Determine the total estimated cost of the products made in each department. If Otto prices its products at cost plus 30 percent of cost, what price per unit should it charge for the Deluxe Drill and the Professional Drill? 133 Home Tools Professional Tools Indirect Cost Assignment Categories Salary of V. P. of production Salary of manager, home tools Salary of manager, professional tools Direct materials cost, home tools Direct materials cost, professional tools Direct labor cost, home tools Direct labor cost, professional tools Direct utilities cost, home tools Direct utilities cost, professional tools General factorywide utilities Production supplies Fringe benefits Depreciation Total costs