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Empire Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2018?: Predetermined Overhead Activity Allocation Base Allocation Rate Materials handling Number
Empire Company manufactures wheel rims. The controller expects the following ABC allocation rates for
2018?:
Predetermined Overhead
Activity
Allocation Base
Allocation Rate
Materials handling
Number of parts
$7.00
per part
Machine setup
Number of setups
700.00
per setup
Insertion of parts
Number of parts
23.00
per part
Finishing
Number of finishing hours
60.00
per hour
Empire produces two wheel rim? models: standard and deluxe. Expected data for
20182018
are as? follows:
| Standard | Deluxe | ||
Parts per rim | 2.0 | 4.0 | ||
Setups per 500 rims | 15.0 | 15.0 | ||
Finishing hours per rim | 2.0 | 4.5 | ||
Total direct labor hours per rim | 4.0 | | 5.0 |
The company expects to produce 500 units of each model during the year.
1.Compute the total estimated indirect manufacturing cost for 20182018. | |
2. | Prior to 20182018?, EmpireEmpire used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 20182018. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each?model, to the nearest cent. |
3. | Compute the estimated ABC indirect manufacturing cost per unit of each model for 20182018. Carry each cost to the nearest cent. |
500
500
units of each model during the year. Step by Step Solution
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