Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Barre-Groton Inc. uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials
Barre-Groton Inc. uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine set-up, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows: (Click the icon to view the budgeted costs and activity bases.) Barre-Groton Inc. expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 2,600 parts, require 15 set-ups, and consume 1,600 hours of finishing time. Job 420 used 100 parts, required 4 set-ups, and consumed 200 finishing hours. Job 510 used 625 parts, required 6 set-ups, and consumed 410 finishing hours. Requirements Requirements Requirement 1. Compute the cost allocation rate for each activity. First, identify the formula, and then compute the rate for each activity Activity overhead rate 1. Compute the cost allocation rate for each activity. 2. Compute the MOH cost that should be assigned to Job 420. 3. Compute the MOH cost that should be assigned to Job 510. = Total activity overhead (est.) 13,000 Cost allocation base (est.) 2,600 Mat. handling $ $ 5 1 part Print Done Machine setup $ 5,700 1 15 = $ 380 I setup Insertion $ 33,800 1 2.600 13 / part Finishing $ 56,000 1,600 = $ 35 /hour Budgeted costs and activity bases - X Requirement 2. Compute the manufacturing overhead cost that should be assigned to Job 420. MOH Cost Activity Materials handling Machine setup Insertion of parts Total Budgeted Manufacturing Overhead Cost Allocation Base $ Number of parts Finishing Activity Materials handling .... Machine set-up ... Insertion of parts ..... 13,000 5,700 Total 33,800 56,000 Number of set-ups Number of parts Finishing direct labour hours Finishing Total $ 108,500
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