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Farragut Company uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials
Farragut Company 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 setup, 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.) Farragut Company expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,000 parts, require 10 setups, and consume 1,500 hours of finishing time. Job 420 used 300 parts, required 2 setups, and consumed 100 finishing hours. Job 510 used 425 parts, required 5 setups, and consumed 320 finishing hours. Read the requirements. Requirement 1. Compute the cost allocation rate for each activity. First identify the formula, then compute the rate for each activity Mat. handling Activity cost allocation rate per part per setup per part per hour Mach setup Insertion Finishing Requirement 2. Compute the manufacturing overhead cost that should be assigned to Job 420. MOH Cost A Data Table Activity Materials handling Machine setup Insertion of parts Finishing Total Requirement 3. Compute the manufacturing overhead cost that should be assigned to Job 510. Activity Materials handling .... Machine setup ....... MOH Cost Activity Materials handling Machine setup Insertion of parts Total Budgeted Manufacturing Overhead Cost 9,000 3,500 45,000 78,000 $ 135,500 Allocation Base Number of parts Number of setups Number of parts Insertion of parts ..... Finishing ........ Finishing direct labor hours Total Finishing ............ Total Print Done sabore e u fold and then continue to the sou tie
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