Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert

image text in transcribed

Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Truck Car Estimated wheels produced 38,000 14,000 Direct labor hours per wheel 1 3 Total estimated overhead costs for the two product lines are $848.000. Calculate overhead rate. (Round answer to 2 decimal places, eg. 12.25.) Overhead rate $ per direct labor hour Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Car wheels Truck wheels Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Activity Cost Pools Setting up machines Assembling Inspection Estimated Use of Cost Drivers 1,000 setups 80,000 labor hours 1,200 inspections Estimated Overhead Costs $240,000 320,000 288,000 Compute the activity-based overhead rates for these three cost pools. Overhead Rates Setting up machines $ Assembling Inspection $ $ Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information. Estimated Use of Cost Drivers per Product Truck 800 Number of setups Direct labor hours Number of inspections Car 200 38.000 100 42.000 1.100 Car Wheels Truck Wheels $ Setting up machines Assembling $ $ Inspection $ Total cost assigned $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Outsourced Functions Risk Management In An Outsourced World

Authors: Mark Salamasick

1st Edition

0894137255, 9780894137259

More Books

Students also viewed these Accounting questions

Question

3. Test complex thinking, not just skills and factual knowledge.

Answered: 1 week ago