Question
Concord makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes with all the bells and
Concord makes two products, Simple and Complex. As their names suggest, Simple is the more basic product, and Complex comes with all the bells and whistles. The company has always allocated overhead costs to products based on machine hours. Last year, the company implemented an activity-based costing system, and managers determined the following activity pools and rates based on total overhead of $1,495,200:
Rate | |||
---|---|---|---|
Assembly | $1.25 per direct labor hour | ||
Fabrication | $9.75 per machine hour | ||
Setups | $18 per batch | ||
Bonding | $118,550 direct to Complex |
Only the Complex product requires bonding, so all the costs of bonding should be allocated to Complex. The following data relate to both products.
Simple | Complex | |||
---|---|---|---|---|
Units produced | 127,000 | 42,000 | ||
Direct labor hours | 240,000 | 101,000 | ||
Machine hours | 51,000 | 33,000 | ||
Batches | 2,700 | 4,600 |
Using the traditional method of allocating overhead costs,
allocate overhead cost to the products. | |
show that the overhead assigned to each product sums to the total company overhead. | |
determine the overhead cost per unit for each product. |
(Round overhead rate and overhead per unit answers to 2 decimal places, e.g. 15.25.)
Simple | Complex | Total | ||||
---|---|---|---|---|---|---|
Machine hours | Enter a number of hours | Enter a number of hours | ||||
Overhead rate | $Enter a dollar amount rounded to 2 decimal places | $Enter a dollar amount rounded to 2 decimal places | ||||
Total overhead to product | $Enter a total amount | $Enter a total amount | $Enter a total amount |
Simple | Complex | |||
---|---|---|---|---|
Total overhead to product | $Enter a dollar amount | $Enter a dollar amount | ||
Number of units produced | Enter a number of units | Enter a number of units | ||
Overhead per unit | $Enter a dollar amount per unit rounded to 2 decimal places | $Enter a dollar amount per unit rounded to 2 decimal places |
Using the activity-based costing rates,
allocate overhead cost to the products. | |
show that the overhead assigned to each product sums to the total company overhead. | |
determine the overhead cost per unit for each product. |
(Round per unit answers to 2 decimal places, e.g. 15.25)
Simple | Complex | Total | ||||
---|---|---|---|---|---|---|
Assembly | $Enter a dollar amount | $Enter a dollar amount | ||||
Fabrication | Enter a dollar amount | Enter a dollar amount | ||||
Setups | Enter a dollar amount | Enter a dollar amount | ||||
Bonding | Enter a dollar amount | Enter a dollar amount | ||||
Total overhead | $Enter a total amount | $Enter a total amount | $Enter a total amount |
Simple | Complex | |||
---|---|---|---|---|
Total overhead to product | $Enter a dollar amount | $Enter a dollar amount | ||
Number of units produced | Enter a number of units | Enter a number of units | ||
Overhead per unit | $Enter a dollar amount per unit rounded to 2 decimal places | $Enter a dollar amount per unit rounded to 2 decimal places |
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