Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Automotive Products designs and produces automotive parts. Actual costs for 2019 were: Department Cost Driver Overhead Usage of cost drivers by customer contract GM Ford
Automotive Products designs and produces automotive parts. Actual costs for 2019 were: Department Cost Driver Overhead Usage of cost drivers by customer contract GM Ford Toyota Total Design Design hours Engineering Engineering hrs. Production Machine Hours Total overhead $3,500,000 1,200,000 4,900,000 $9.600.000 2,500 4,200 35,000 9,000 4,300 32,000 7,500 4,500 31,000 19,000 13,000 98,000 Pricing is based on a mark-up from cost. Ford has complained about the pricing, so our controller assigns you the task of determining if using peanut butter costing (one plant-side rate) is good enough. Calculate overhead rates to at least 1/100 of a cent. 1. Calculate the overhead costs for Ford if there is one plant-wide rate based on machine hours. $ 2. Calculate the overhead costs for Ford if there are separate overhead allocation rates for design, engineering and production. $ Is Ford correct to complain about the costs being assigned to their work? (Indicate what percentage change there is in allocated costs, and which direction, as part of your answer.)
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