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Davis, Managerial Accounting, 2e MANAGERIAL ACC (Ac CALCULATOR MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK Exercise 7-14 Jay Krue makes two products, Simple and
Davis, Managerial Accounting, 2e MANAGERIAL ACC (Ac CALCULATOR MESSAGE MY INSTRUCTOR STANDARD VIEW PRINTER VERSION BACK Exercise 7-14 Jay Krue 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 actlvity-based costing system, and managers determined the following activity pools and rates based on total overhead of $1,591,000: Rate Assembly Fabrication Setups Bonding $1.25 per direct labor hour $9.75 per machine hour $18 per batch $193,750 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 Units produced Direct labor hours Machine hours Batches Simple 127,000 230,000 53,000 2,600 Complex 41,000 109,000 33,000 4,900 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 per unit answers to 2 decimal places, e.g. 15.25.) Simple Complex Total Machine hours Overhead rate Total overhead to product Simple Comple>x Total overhead to product Number of unlts produced Overhead per unlt
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