Question
Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Units
Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Units produced Production runs per quarter Standard 10,000 50 Direct materials cost per unit $ 30 50 Premium 2,500 25 $ 64 75 Direct labor cost per unit Manufacturing overhead in the plant has three main functions: supervision, setup labor, and incoming material Inspection. Data on manufacturing overhead for a representative quarter follow: Supervision Setup labor Incoming inspection Total overhead $ 206,250 240,000 172,500 618,750 Required: a. Benton currently applies overhead on the basis of direct labor cost. What is the predetermined overhead rate for the quarter? b. The CFO and the plant controller at Benton are thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: direct labor cost for supervision, production runs for setup labor, and direct material dollars for incoming inspection. Compute the cost driver rates for the proposed system at Benton. Note: Round "Incoming Inspection" answer to 1 decimal place. Overhead rate % of direct labor cost Required: a. Benton currently applies overhead on the basis of direct labor cost. What is the predetermined overhead rate for the quarter? b. The CFO and the plant controller at Benton are thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: direct labor cost for supervision, production runs for setup labor, and direct material dollars for Incoming inspection. Compute the cost driver rates for the proposed system at Benton. Note: Round "Incoming Inspection" answer to 1 decimal place. a. Overhead rate b. Supervision b. Setup labor b. Incoming inspection % of direct labor cost % of direct labor cost per production run % of direct material cost
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