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Brampton Inc. uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs:
Brampton 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.) Brampton Inc. expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,000 parts, require 10 set-ups, and consume 2,000 hours of finishing time. Job 420 used 225 parte, required 4 set-ups, and consumed 200 finishing hours. Job 510 used 850 parts, required 5 set-ups, and consumed 380 finishing hours. Requirements Requirement 1. Compute the cost allocation rate for each activity. First, identify the formula, and then compute the rate for each activity. Mat. handing Machine setup Insertion Finishing Requirement 2. Compute the manufacturing overhead cost that should be assigned to Job 420. Activity Materials handling Machine setup MOH Cost Insertion of parts Finishing Total Requirement 3. Compute the manufacturing overhead cost that should be assigned to Job 510. Activity Materials handling MOH Cost Machine setup Insertion of parts Finishing Total Activity overhead rate part = /setup /part |/hour --> - x Budgeted costs and activity bases Total Budgeted Manufacturing Activity Overhead Cost Material handling.... S 12,000 Allocation Base Number of parta Machine set-up 3,400 Number of set-ups Insertion of parts Finishing Total 48,000 Number of parts 80,000 Finishing direct labour hours $ 143,400 Print Done
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