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all parts please Randel Manufacturing makes two products: Budget and Deluxe. For traditional costing, Randel uses Direct Labor hours to calculated its overhead rate. The
all parts please
Randel Manufacturing makes two products: Budget and Deluxe. For traditional costing, Randel uses Direct Labor hours to calculated its overhead rate. The following information has been presented by the cost accountant: Activity Cost pool Cost Driver Estimated OH Estimated Activities Ordering and Receiving Machine Setup $ Orders 1.000 Orders 130.000 Setups 297,000 900 Setups Machine Hours 1,000,000 250,000 Machine Hours Machining Assembly Parts Inspection Inspections 2,000,000 Parts 16,000 300,000 1,000 Inspections $ 1.743,000 Total Overhead The direct labor rate for Randel is $20 per direct labor hour. The estimated Direct Labor hours for the period are 300,000 hours. The information for the products follows: Budget Deluxe $8/unit $15/unit 0.275 DLH/unit Direct Materials Direct labor Hours Orders Setups Machine hours Parts Inspections 0.35 DLH/unit 600 500 400 400 150,000 1,200,000 100,000 800,000 550 450 Units 700,000 200,000 Required: 1) Compute the Traditional Costing Predetermined Overhead Rate 2) Allocate overhead using your Predetermined Overhead Rate 3) Compute the manufacturing cost per unit. 4) Compute the activity rates under Activity Based Costing (ABC) 5) Allocate the overhead using the ABC activity rates 6) Compute the manufacturing cost per unit 7) Discuss whether Randel company should use Traditional costing or ABC. Please explain Step by Step Solution
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